Yakub02
Banned
Management commentary’ is additional information about an entity that complements the information provided in the financial statements of an entity.
Two important features of management commentary are that:
it is provided by management, and expresses the view of the management of the entity;
it is a commentary; therefore much of it is in a narrative form. The Canadian Accounting Standards Board has defined management commentary as follows:
Definition Management commentary: A narrative explanation, through the eyes of management, of how your company performed during the period covered by the financial statements and of your company’s financial condition and future prospects.
The IASB agrees with most of this definition, but believes that management commentary should include quantitative information as well as narrative; therefore to call it a ‘narrative’ explanation is misleading.
Management commentary is useful to the users of financial statements because it provides them with additional information that supplements the figures in the accounts. It also gives them an insight into how management view the performance of the business and what they hope to achieve in the future.
An assessment of the risks and opportunities facing the entity can also be useful for an investor who may want to make a decision as to whether to continue investing in the entity. Management commentary is common in many countries. In the European Union, companies are required to include a business review in their annual report and accounts.
Two important features of management commentary are that:
it is provided by management, and expresses the view of the management of the entity;
it is a commentary; therefore much of it is in a narrative form. The Canadian Accounting Standards Board has defined management commentary as follows:
Definition Management commentary: A narrative explanation, through the eyes of management, of how your company performed during the period covered by the financial statements and of your company’s financial condition and future prospects.
The IASB agrees with most of this definition, but believes that management commentary should include quantitative information as well as narrative; therefore to call it a ‘narrative’ explanation is misleading.
Management commentary is useful to the users of financial statements because it provides them with additional information that supplements the figures in the accounts. It also gives them an insight into how management view the performance of the business and what they hope to achieve in the future.
An assessment of the risks and opportunities facing the entity can also be useful for an investor who may want to make a decision as to whether to continue investing in the entity. Management commentary is common in many countries. In the European Union, companies are required to include a business review in their annual report and accounts.
