The IFRS Foundation has published a case study report showing how companies from different parts of the world have improved communication in their IFRS financial statements, in a bid to encourage improvements in reporting
The report contains six case studies from varied industries. Its aim is to illustrate how improvements can be made and inspire other companies to initiate their own improvement projects.
The featured companies are FTSE 100 media company ITV Ltd; New Zealand dairy operator Fonterra Co-operative Group Ltd; Australian conglomerate Wesfarmers Ltd; the Canadian company PotashCorp; French technology multinational Orange; and Danish jewellery manufacturer Pandora.
The report explains the process these companies have gone through to improve disclosures in the notes to their IFRS financial statements and shows examples of the improvements made.
These are matched against the Foundation’s suggested principles of effective communication, which include tailoring information to a company’s own circumstances; using simple descriptions and sentence structures; ranking pieces of information to help users of financial statements understand their importance; linking information; selecting a suitable format for the type of information companies provide; avoiding duplication; and disclosing information in a way that enhances comparability among companies and across reporting periods without compromising its usefulness.
The Foundation says the examples demonstrate that relatively small changes can significantly improve the quality of the financial information that companies provide.
The report forms part of the board’s work under the theme of better communication in financial reporting. It complements other initiatives, including the principles of disclosure project and the recently published IFRS Practice Statement 2 Making Materiality Judgements.
Hans Hoogervorst, chairman of the board, said: ‘The information in financial statements has to be communicated clearly and effectively to help investors make investment decisions. We hope that this report will inspire companies to start or continue their journeys to improve the communication of information in their financial statements.’
Better Communication in Financial Reporting—Making disclosures more meaningful is available here.
Report by Pat Sweet
