The London Stock Exchange has responded to the International Accounting Standards Board (IASB) on their discussion paper regarding Management Commentary.
In our letter, we support the spirit of their work in attempting to find a convergent approach for directors to make forward-looking statements about the strategic direction of their company, but we are not supportive of their conclusion that management commentary presentation should become a prerequisite for compliance with International Financial Reporting Standards.
In our response, we reinforce the need for maintaining the right balance between management flexibility and investor protection and highlight that Main Market companies have faced an unprecedented level of regulatory change in the last year. We also suggest that the repeal of the Operating and Financial Review by the UK Government has reduced unnecessary regulatory burden from Main market companies, with the remaining requirements of the Business Review being perfectly adequate for company directors to make forward-looking statements about the strategic direction of their business.