27. August 2021


Today EFRAG has published a Discussion Paper (DP) on possible approaches for better information on intangibles. The comment period ends on 30 June 2022.

Background: The consultation on EFRAG’s research agenda in 2018 identified the need for addressing improved reporting on intangibles. It is widely acknowledged that internally generated intangible assets play an important role for an entity’s performance, which is not sufficiently reflected in the entity’s financial statements. Differences between accounting for acquired and internally generated intangibles cause discussions about current reporting practices.

Content: The DP presents different possible approaches for better information on intangibles and addresses the advantages and disadvantages attached to these approaches. It focuses on information to be provided in the financial statements, and in the management report. The scope of EFRAG’s discussions goes beyond the existing definition of assets in financial reporting and also covers sources of possible economic benefits that would not be controlled by an entity. Therefore, the DP uses the term “intangibles” instead of “intangible assets”.

Consultation: The contributions to the discussion are intended to support EFRAG and the IASB in considering current and future proposals related to intangibles. Comments are welcome by 30 June 2022.

Linkage to sustainability reporting: Chiara Del Prete, EFRAG TEG Chair, emphasises in her press statement on the DP that future reporting on intangibles and value creation is a key area for connecting financial and sustainability reporting. Nevertheless, sustainability-related information on intangibles is considered in the DP only to the extent to which it is useful for the primary users of financial reports and can be considered “pre-financial” (so-called outside-in perspective or financial materiality). EFRAG would like to consider the connection with the so-called inside-out perspective (impact materiality) in future discussions.

ASCG’s activities: ASCG will comment on the DP. It is also planned to establish a new working group that will consider new approaches for better information on intangibles including both financial and sustainability reporting.