PAAinE - Performance Reporting - March 2009

Although the IASB and FASB had an active project on Financial Statement Presentation and had issued a Discussion Paper on the subject recently, there EFRAG considered that there were a number of fundamental issues about the presentation of financial performance information that that discussion paper did not address. Those issues included:

• should the net income line be retained?

• (if it should be retained), what should the basis be for determining whether something is within net income or outside net income?

• what role should recycling have in performance reporting?

The PAAinE Discussion Paper Performance Reporting: A European Discussion Paper explored those issues. It noted that performance is a complex, multi-faceted notion that cannot be encompassed in one or a few numbers. Nevertheless both preparers and users want some key performance reporting lines to convey headline numbers and to provide a starting point for analysis. It is therefore important that items of income, expense, gains and losses are disaggregated, grouped and aggregated in a way that ensures that the most useful key lines are presented. The paper noted that whether recycling is needed also depends on the aggregation/disaggregation model used. The final chapters of the paper discuss various disaggregation models.

This was the second PAAinE paper on Performance Reporting, and it followed on from the first (What (if anything) is wrong with the good old income statement?) which was issued in November 2006. The second paper was prepared by staff of the Spanish standard-setter and EFRAG.