Although the particular focus of management commentary will depend on the facts and circumstances of the entity, management commentary should include information that is essential to an understanding of the five elements discussed in the table below. The table links these elements with the IASB's assessment of the needs of the primary users of management commentary:
The nature of the business- The knowledge of the business in which an entity is engaged and the external environment in which it operates
Management's objectives and its strategies for meeting those objectives- To assess the strategies adopted by the entity and the likelihood that those strategies will be successful in meeting management's stated objectives
The entity's most significant resources, risks and relationships A basis for determining the resources available to the entity as well as obligations to transfer resources to others; the ability of the entity to generate long-term, sustainable net inflows of resources; and the risks to which those resource-generating activities are exposed, both in the near term and in the long term
The results of operations and prospects- The ability to understand whether an entity has delivered results in line with expectations and, implicitly, how well management has understood the entity's market, executed its strategy and managed the entity's resources, risks and relationships
The critical performance measures and indicators that management uses to evaluate the entity's performance against stated objectives- The ability to focus on the critical performance measures and indicators that management uses to assess and manage the entity's performance against stated objectives and strategies
