The CFA Institute Centre for Financial Market Integrity today released the final version of its global framework paper, the Comprehensive Business Reporting Model: Financial Reporting for Investors (CBRM), which provides in-depth recommendations for how financial data should be reported to investors.

“As investors form an opinion about a company, they need high quality information to enable them to understand the economic activities that are reported in its financial statements and how this information was produced,” says Kurt Schacht, managing director of the CFA Institute Centre. “Discerning between the underlying economics and accounting conventions is necessary to address the larger questions about a company’s future prospects as well as its historical performance. We believe that our proposals will aid in this effort.”

Among other recommendations, the principles outlined in the CBRM suggest several key areas for change, including:

  • Present information in a cohesive manner that aligns reported items by their nature to show their interrelationship across the primary financial statements.
  • Recognize all economic transactions and events that affect investors’ wealth as they occur.
  • Provide thorough disclosures so investors have all the information to understand items in financial statements, measurement properties, and risk exposures.

The CBRM also highlights the CFA Institute Centre’s call for the introduction of a “Statement of Changes in Net Assets Available to Common Shareowners.” This statement will disaggregate current-period transactions, estimates, and changes in fair value, which are not shown separately in the current income statement. The aim of the Statement of Changes is to deemphasize the current focus on net income as the primary performance indicator by providing a comprehensive alternative for measuring the “bottom-line” performance.

The CFA Institute Centre is the arm of CFA Institute dedicated to promoting fair and open markets on behalf of its 94,500 members, investment professionals who practice in 133 countries. It acts as an advocate for investor protection and high professional standards.