Management Commentary

Question 1

Purpose of Management Commentary

Answer 1

To disclose additional information regarding the entity

Question 2

Argument for non-binding framework

Answer 2

1. MC allows for a mere clearer picture to be presented on the performance of the entity and the environment the entity is in. Such information might be sensitive and can make company lost their competitive advantage if the presentation is compulsory.
2. Making MC compulsory will result entites having to present MC on the rigorous requirements of such statements.
3. Has its own challenges when it comes to standardisation of the presentation format.

Question 3

Argument for ifrs standard

Answer 3

1. Comparability - making it as standard will make easier for us to compare fs among entities, compare among industry
2. Allow each company to be more transparent

Question 4

Qualitative Characteristics of MC

Answer 4

1. Understandability - let financial users make sense of the performance of the entity
2. Relevance - As there is no standardisation, company can use alternative performance measurement or non financial information such as ebitda or free cash flows. This help better decision making for companies
3. Comparability - Understanding similarities and differences either between the years or other entities