Proactive - The Role of the Business Model in Financial Statements

EFRAG initiated a proactive project to explore what role an entity's business model should play in financial statements. The French and UK standard setters were project partners.

At its December 2010 meeting, EFRAG approved the project plan and the call for candidates for the advisory panel for this proactive project.

At the March 2011 meeting, EFRAG approved the formation of three panels to support the proactive project on the business model. The three panels consist of a financial services panel, other industries panel and a mixed panel (please find below a document with the panel configuration). The three panels would be linked by sharing a common chairman and EFRAG staff.

At the April 2011 meeting, EFRAG approved the scope and phasing of the project. The scope and phases of the project included: 

• aim to gain an understanding of what is meant by the term 'business model' to determine if a single working definition of the term can be developed for use in financial reporting and whether business models can be observed and described objectively,
• examine what role the concept of a business model should play in financial statements.

The first joint advisory panel meeting was held in June 2011. 

At the December 2011 meeting, EFRAG and its partners reconsidered the two phase approach and decided the project should be completed in a single phase with a single discussion paper. Later in May 2012, EFRAG and its partners agreed that for purposes of a discussion paper that the business model should be described as something dealing with value creation and cash flow generation.

At the April 2013 meeting, EFRAG and its partners decided to develop a Bulletin on the topic in a series of Conceptual Framework documents based on the work that has been done on the project. The Bulletin was issued in July 2013 with a comment deadline of 30 September 2013. It was also decided that the discussion paper being developed would be relabeled as a research paper.

The research paper was issued in December 2013 with a comment deadline of 31 May2014.

A feedback statement reflecting the comments by constituents and how those have been addressed was issued in September 2014.