Ma uszewska, Ewa Wanda; Tuszkiewicz, Maciej And zej
A icle
Bounda ies o managemen pe o mance measu es (MPMs) disclosed
in p ima y inancial s a emen s p epa ed in acco dance wi h new
s anda d planned o supe sede IAS 1
Cen al Eu opean Economic Jou nal (CEEJ)
P o ided in Coope a ion wi h:
Facul y o Economic Sciences, Uni e si y o Wa saw
Sugges ed Ci a ion: Ma uszewska, Ewa Wanda; Tuszkiewicz, Maciej And zej (2024) : Bounda ies o
managemen pe o mance measu es (MPMs) disclosed in p ima y inancial s a emen s p epa ed
in acco dance wi h new s anda d planned o supe sede IAS 1, Cen al Eu opean Economic Jou nal
(CEEJ), ISSN 2543-6821, Sciendo, Wa saw, Vol. 11, Iss. 58, pp. 1-16,
h ps://doi.o g/10.2478/ceej-2024-0001
This Ve sion is a ailable a :
h ps://hdl.handle.ne /10419/324603
S anda d-Nu zungsbedingungen:
Die Dokumen e au EconS o dü en zu eigenen wissenscha lichen
Zwecken und zum P i a geb auch gespeiche und kopie we den.
Sie dü en die Dokumen e nich ü ö en liche ode komme zielle
Zwecke e iel äl igen, ö en lich auss ellen, ö en lich zugänglich
machen, e eiben ode ande wei ig nu zen.
So e n die Ve asse die Dokumen e un e Open-Con en -Lizenzen
(insbesonde e CC-Lizenzen) zu Ve ügung ges ell haben soll en,
gel en abweichend on diesen Nu zungsbedingungen die in de do
genann en Lizenz gewäh en Nu zungs ech e.
Te ms o use:
Documen s in EconS o may be sa ed and copied o you pe sonal
and schola ly pu poses.
You a e no o copy documen s o public o comme cial pu poses, o
exhibi he documen s publicly, o make hem publicly a ailable on he
in e ne , o o dis ibu e o o he wise use he documen s in public.
I he documen s ha e been made a ailable unde an Open Con en
Licence (especially C ea i e Commons Licences), you may exe cise
u he usage igh s as speci ied in he indica ed licence.
h ps://c ea i ecommons.o g/licenses/by/4.0/
ISSN: 2543-6821 (online)
Jou nal homepage: h p://ceej.wne.uw.edu.pl
To ci e his a icle
Ma uszewska, E.W., Tuszkiewicz, M.A. (2024). Bounda ies o managemen
pe o mance measu es (MPMs) disclosed in p ima y inancial s a emen s
p epa ed in acco dance wi h new s anda d planned o supe sede IAS 1.
Cen al Eu opean Economic Jou nal, 11(58), 1-16.
DOI: 10.2478/ceej-2024-0001
To link o his a icle: h ps://doi.o g/10.2478/ceej-2024-0001
Bounda ies o managemen
pe o mance measu es (MPMs)
disclosed in p ima y inancial
s a emen s p epa ed in acco dance
wi h new s anda d planned
o supe sede IAS 1
Ewa Wanda Ma uszewska,
Maciej And zej Tuszkiewicz
Open Access. © 2024 E.W. Ma uszewska, M.A. Tuszkiewicz, published by Sciendo.
This wo k is licensed unde he C ea i e Commons A ibu ion 4.0 In e na ional License.
Ewa Wanda Ma uszewska
Uni e si y o Economics in Ka owice, Depa men o Business In o ma ics and In e na ional
Accoun ing, ul. 1 Maja 50, 40-287 Ka owice, Poland
co esponding au ho : ewa.ma [email protected] owice.pl
Maciej And zej Tuszkiewicz
Uni e si y o Economics in Ka owice, Depa men o Business In o ma ics and In e na ional
Accoun ing, ul. 1 Maja 50, 40-287 Ka owice, Poland
Bounda ies o managemen pe o mance measu es (MPMs)
disclosed in p ima y inancial s a emen s p epa ed in
acco dance wi h new s anda d planned o supe sede IAS 1
Abs ac
We ou line he managemen pe o mance measu es (MPMs)’ bounda ies based on he upcoming in oduc ion o
MPM’s de ini ion o In e na ional Financial Repo ing S anda ds (IFRS). The li e a u e in es iga es business pe o mance
measu es concen a ing on manage s’ needs, while IFRS aims o p o ide inancial in o ma ion o ex e nal use s who
p o ide esou ces o he en i y. This indica es a gap be ween how pe o mance me ics ha e been in es iga ed so a
and how IFRS will adop hem. We used analysis o he exposu e d a o he planned s anda d oge he wi h wo king
ma e ials de eloped in he consul a ion p ocess. Fu he , a case s udy is p esen ed. Resul s show ha he scope o
MPM o be in oduced o IFRS is limi ed compa ed o he b oad spec um o pe o mance measu es p esen ed in
he li e a u e. We con ibu e by showing he a enues o u u e pe o mance measu es esea ch using signalling
and agency heo y and by indica ing he limi ed scope o MPMs and hus bound p ospec s o using hem o a ull
assessmen o he en i y‘s pe o mance.
Keywo ds
managemen pe o mance measu es | MPM | pe o mance measu emen | IAS 1 | IFRS 18 | signalling heo y | agency heo y
JEL Codes
M00, M40, M41
1. In oduc ion
In 2014, In e na ional Accoun ing S anda ds Boa d
(he eina e IASB) has s a ed a p ojec named
“P ima y Financial S a emen s.” The p ojec aims o
inc ease anspa ency and compa abili y o inancial
s a emen s, hus enhancing he ele ance o he
in o ma ion disclosed. As a esul , an exposu e d a
was published in 2019, Gene al P esen a ion and
Disclosu es ED/2019/7 (la e e e ed o as ED),
which p esen s a s anda d planned o supe sede IAS
1 “P esen a ion o Financial S a emen s”. Since hen,
he Eu opean Financial Repo ing Ad iso y Boa d
(EFRAG), wo king on de eloping IFRS S anda ds om
a Eu opean pe spec i e, in pa allel collec s opinions
and o ganises ield es s o he ED. I led o amendmen s
wi hin he scope and con en o he planned IFRS 18
P esen a ion and Disclosu e in Financial S a emen s
(IFRS Accoun ing, 2023, July). The au ho s we e a pa
o he expe g oups es ing and s a ing hei opinions
on he o iginal ED and i s amended e sions.
This a icle aims o ou line he bounda ies o he
MPM based on he upcoming changes o inancial
epo ing. This need a ises om he ac ha he
de ini ion o MPM will be in oduced by IFRS o
he i s ime in 2024 (IFRS Founda ion, 26.07.2023),
wi h an e ec i e da e in 2027. Based on he analysis
o egula ions de eloped since 2019, he au ho s show
he necessi y o p epa e s o inancial s a emen s o
examine he new egula ions as well as he obliga ion
o he use s o inancial s a emen s o unde s and
hese new elemen s o inancial s a emen s o p ope ly
CEEJ • 11(58) • 2024 • pp. 1-16 • ISSN 2543-6821 • DOI: 10.2478/ceej-2024-0001 3
use hem in hei decision-making p ocesses. To
achie e he s a ed objec i e, he au ho s ask a esea ch
ques ion: Wha a e he bounda ies o MPM p epa ed in
acco dance wi h he planned s anda d? This ques ion
is essen ial, as pe o mance measu es (business
pe o mance measu es, pe o mance measu emen
and managemen sys ems (PMMSs), o pe o mance
me ics) al eady exis in he heo e ical and empi ical
li e a u e. Fu he , quali a i e cha ac e is ics o
inancial epo s a e buil upon ai h ul ep esen a ion
and ele ance; hus, MPM, being a pa o IFRS, mus
comply wi h hem, o cing manage s o make well-
hough -ou decisions abou he ype o MPM ha is
made public and used by he economy pa icipan s.
2. Business Pe o mance
Measu emen : Li e a u e
Re iew
The impo ance o business pe o mance measu emen
in assessing he e iciency and e ec i eness o
an en i y’s pas ac ions is b oadly emphasised in
managemen li e a u e, including accoun ing s udies
(Ma opulo e al., 2021; Neely e al., 2000). Hence, i
is an a ea o cons an esea ch, bo h heo e ical and
p ac ical. Conside able in e es in his opic began
wi h he c i icism o business pe o mance me ics
used in he 1970s and 1980s (Be line & B imson,
1988; Chandle , 1977; Coope & Kaplan, 1988). The
main complain was ha business pe o mance
measu es do no p o ide a clea answe as o which
ac ions in luenced which esul s (Ta icchi e al.,
2009), and hus di e en pe o mance measu emen
and managemen models we e designed like he
Du Pon Py amid o Financial Ra ios (1977), esul s
and de e minan s amewo k (B ignall e al., 1991),
he pe o mance py amid (Lynch & C oss, 1991),
he balanced sco eca d (Kaplan & No on, 1992),
he p ocess-based app oach (Neely e al., 2000) o
he Camb idge pe o mance measu emen p ocess
(Neely, 2002). Fu he , de eloped measu es we e
adjus ed and/o amended o he changing business
en i onmen (Kenne ley & Neely, 2003). In addi ion,
he li e a u e as a whole deals wi h he adjus men o
designed models o he needs o small and medium
en i ies ha ha e some speci ic cha ac e is ics, such
as no sepa a ion o he owne om he manage ,
lack o o mal s a egy ha should be included in
he model, o no clea o ganisa ional s uc u e, and
conce n mainly o sho - e m cash lows (Bah l e
al., 2016). This s eam o li e a u e clea ly indica es
ha pe o mance measu es a e mainly based on he
in o ma ion disclosed in he inancial s a emen s
bu also on non- inancial measu es. This is because
pe o mance measu es mus measu e bo h inancial
and non- inancial aspec s o pe o mance (Bah l
e al., 2016), like p o i abili y, e iciency, cus ome
sa is ac ion, o quali y o se ices (goods p oduced).
Cle e in eg a ion o inancial and non- inancial
and in e nal and ex e nal da a builds he s eng h
o pe o mance measu emen used in con empo a y
en i ies. Fu he , pe o mance measu es should be
p epa ed based on he in o ma ion a ailable in he
en i y (as addi ional collec ing o da a makes he
sys em oo expensi e). They should no only measu e
pas pe o mance bu , beyond he abo e, guide
manage s o u u e ac i i ies, and in addi ion, hey
should implici ly con ey he en i y’s s a egy (Boselie
e al., 2005; Van de Hauwae e al., 2022). The abo e
desc ip ion o pe o mance me ics is incomple e, as
he li e a u e highligh s a ious cha ac e is ics cen al
o he app oaches unde in es iga ion (Ta icchi e al.,
2009), indica ing a mul i ace ed app oach o e alua ing
an en i y’s pe o mance, aiming a comple e business
desc ip ion.
To summa ise, esea ch in e es in measu ing
business pe o mance seems o adhe e o he p inciple
ha when one can measu e some hing, one possesses
knowledge abou i ; hus, one can imp o e i (Micheli
& Ma i, 2014). Sha ing knowledge wi h hose ou side
he en i y seems o be a basic p emise o in oducing
MPM in o IFRS.
3. Theo e ical Unde pinning
Fo many yea s in he accoun ing li e a u e, a g ea
deal o a en ion was paid o he need o ma ke
pa icipan s o eliable and ele an in o ma ion
(Chen e al., 2021; Cu le e al., 1989; Kadous e al.,
2012; Ma ilen e al., 2013) as well as o he accoun ing
s uggle o achie ing i (Alexande & A che , 2003;
Bu chell e al., 1985; Ha mann e al., 2018; Lambe
e al., 2007; Macin osh, 2009; Macin osh e al., 2000;
7). One can say ha esea che s ag ee on he need o
p o ide in o ma ion abou he en i y’s pe o mance
ha ma ke pa icipan s use o make hei decisions.
CEEJ • 11(58) • 2024 • pp. 1-16 • ISSN 2543-6821 • DOI: 10.2478/ceej-2024-0001 4
Signalling heo y and agency heo y seem o
domina e he li e a u e ci ed abo e. Bo h heo ies
e e o manage s who decide abou he in o ma ion
p o ided o in es o s, c edi o s, and o he unin o med
pa ies ou side he en i y. Based on signalling heo y,
i can be a gued ha manage s—who ha e supe io
knowledge, in e alia, abou he en i y’s u u e cash
lows—make accoun ing choices o e eal hei
expec a ions o unin o med pa icipan s o he
economy (Hol hausen, 1990). Signals de i e om an
in en o imply some hing in he hope ha he ma ke
(ex e nal pa ies) will change he company’s alua ion
(Connelly e al., 2011). The heo y was widely used o e
he yea s wi h ela ion o accoun ing (Aljughaiman e
al., 2023; Gomoi & Pan ea, 2016; Khan e al., 2019).
Managemen pe o mance me ics in es iga ed in
he p io li e a u e, as well as MPM in a way de ined
in he planned IFRS, p o ide in o ma ion abou he
en i y’s p esen condi ion and p ospec s.
We also unde pin ou esea ch on agency heo y,
which desc ibes he incen i e p oblems caused by
he sepa a ion o owne ship and managemen , called
he p incipal-agen p oblem (Ross, 1973). Agency
heo y is one o he ou mos used concep s wi hin
beha iou al accoun ing (Chapman e al., 2007). I
esul s in manage s’ use o disc e iona y accoun ing
choices in luencing inance managemen , ea nings
managemen (Białek-Jawo ska and Dec; 2019; Ha ison
& Ha ell, 1993; Jassim e al., 1988; Liang e al., 2023),
and inancial epo ing (Ayu e al., 2020; Knoebe &
McKee, 1991; Ma uszewska e al., 2023; Palas e al.,
2023). Thus, agency heo y can be used no only o
accoun ing policy choices and olun a y disclosu es
bu also o obliga o y disclosu es in he o m o ,
e.g., manage ial commen a y whe e manage s a e
o decide abou he de ails o da a p esen ed and he
o m o p esen a ion o inancial in o ma ion. Thus,
we a gue ha new MPM equi emen s unde planned
s anda d can also be subjec o he agency p oblem.
As bo h heo ies add ess simila accoun ing
issues, concen a ing on he p o ision o in o ma ion
o hose ou side he en i y, i should be no ed ha
agency heo y pays li le a en ion o signalling, while
signalling heo y igno es he agency p oblem (Mo is,
1987), we ind bo h heo ies as sui able heo e ical
backg ound o ou s udy. On he one hand, he
planned in oduc ion o MPM can be seen as an
oppo uni y o signal posi i e ou comes o an en i y’s
pe o mance. Howe e , on he o he hand, when
nega i e in o ma ion is e ealed h ough MPM, i can
be subjec o he agency p oblem.
4. MPMs in he Planned
S anda d
4.1. The Unde s anding and he Scope
o MPMs
The changes in inancial s a emen s upcoming in he
new s anda d ha e been di ided by IASB in o ou
main a eas:
1) classi ica ion and p esen a ion o ope a ions in he
p o i -and-loss s a emen ,
2) managemen pe o mance measu es (he eina e
MPMs),
3) classi ica ions o ope a ing cos s by unc ion and
by na u e,
4) unusual incomes and expenses (EFRAG IASB
Join Online Round able, 2022, No embe ).
Rega ding he classi ica ion and p esen a ion
o ope a ions in he p o i -and-loss s a emen ,
he planned changes include (among o he s) he
in oduc ion o inancial and in es men ac i i ies
segmen s besides he al eady exis ing ope a ion
ac i i ies segmen . I also in oduces unusual incomes
and expenses and o ces new p esen a ion o ope a ing
cos s. New segmen a ion is impo an om he poin
o iew o MPM, as new ca ego ies among p o i -
and-loss segmen s may end up wi h changed o new
pe spec i es o business pe o mance measu emen .
Rega ding MPM, he p ojec o he new IFRS
s a es ha “Managemen Pe o mance Measu es a e
sub o als o income and expenses no speci ied by
IFRS Accoun ing S anda ds ha a e used in public
communica ion ou side inancial s a emen s” (ED,
2019).
D awing om his de ini ion, a ew key poin s
equi e explana ion and we e al eady cla i ied in he
de elopmen o he new s anda d p ocess. Rega ding
he i s pa o he de ini ion, IASB p oposed a g aph
o cla i y he scope o MPMs, as pe Figu e 1.
The de ini ion s a es ha MPMs a e sub o als o
income and expenses. Tha implies ha only measu es
esul ing om he sub ac ion o income and expenses
a e wi hin he scope o MPMs. As shown in Figu e 1,
he abo e excludes all pe o mance me ics ha a e
no d awn om inancial alues, bu also all he
inancial indica o s ha a e no a esul o sub ac ion
o income and expenses, like e u n on asse s,
CEEJ • 11(58) • 2024 • pp. 1-16 • ISSN 2543-6821 • DOI: 10.2478/ceej-2024-0001 5
ea nings pe sha e, o economic alue added (EVA).
In addi ion, ED s a es ha MPMs a e no speci ied by
IFRS Accoun ing S anda ds, meaning ha , as shown
in Figu e 1, ope a ing p o i is no MPM, as i will be
equi ed pe s anda d o p esen he ope a ing p o i
on he p o i -and-loss s a emen scheme. The second
pa o he de ini ion, “used in public communica ion
ou side inancial s a emen s”, b ough much
discussion, as he e was con usion abou whe he any
e bal communica ion o any s a emen placed on
social media would au oma ically incline o include a
speci ic measu e o MPM i i mee s he i s pa o
he de ini ion. Acco dingly, he IASB has en a i ely
decided o add a no e ha he de ini ion excludes
“o al communica ion, ansc ip s and social media
pos s” and add a ebu able p esump ion, p esen ed
in Figu e 2.
As obse ed, he ebu able p esump ion is used as
a o m o logical explana ion ha when an en i y uses a
measu e in i s public communica ion, i communica es
managemen ’s iew o an aspec o an en i y’s inancial
pe o mance. The ebu able p esump ion is mean
o be used as guidance and educ ion o subjec i i y,
bu also as a possibili y o a oid he equi emen o
p esen a measu e ha is no in i s essence an MPM bu
happened o be communica ed in public. The e o e,
he new s anda d will manda e he p esen a ion o a
measu e communica ed in public i he e is easonable
and suppo able e idence ha i communica es
managemen ’s iew and is done consis en ly. As a esul ,
he company could no enume a e a speci ic measu e
as MPM i i was used inciden ally. This is impo an
o p epa e s o inancial s a emen s, bu also o use s
o inancial s a emen s, who should be awa e o his
ac o di e en ia e MPMs om o he pe o mance
in o ma ion ha does no mee s ic equi emen s
educing, e.g., subjec i i y. Once managemen decides
on a measu e ha alls wi hin he MPM de ini ion, i
is equi ed o p epa e a disclosu e wi hin he inancial
s a emen . IASB has ou lined ou main poin s o he
disclosu e no e, as p esen ed in Figu e 3.
As shown in Figu e 3, he i s and p obably
he mos ime-consuming pa o he disclosu e
p epa a ion will be he econcilia ion o he MPM
o he closes sub o al ha IFRS speci ies. The
closes sub o al means he sub o al p esen ed in he
p o i -and-loss s a emen p epa ed acco ding o he
s anda ds. The econcilia ion builds he high quali y
o he in o ma ion disclosed wi h MPMs in e ms
o ai h ul ep esen a ion and ele ance, as i makes
i anspa en and some imes may enable use s o
inancial s a emen s o compa e MPMs be ween
Speci ied by IFRS, e.g.:
• Ope a ing p o i ,
• P o i be o e ax.
MPMs, e.g.:
• Adjus ed G oss P o i ,
• Adjus ed EBITDA,
• Adjus ed p o i o loss.
Pe o mance measu es
Non-Financial pe o mance
measu es, e.g.:
• Cus ome sa is ac ion,
• H&S sco e,
• Numbe o new clien s.
Financial pe o mance measu es
O he measu es, e.g.:
• Wo king capi al,
•Re u n on asse s,
• Ins an liquidi y a io.
(Sub) o als o income and expenses
Figu e 1. Scope o Managemen Pe o mance Measu es
Sou ce: (IFRS Accoun ing, 2023, July)
A e used in public communica ions ou side
inancial s a emn s =
Communica e managemen 's iew o an
aspec o an en i y's inancial pe o mance
Sub o als o income and expenses no speci ied by IFRS Accoun ing S anda ds ha :
Figu e 2. Rebu able P esump ion o he De ini ion o MPM
Sou ce: EFRAG, 2022, Sep embe
CEEJ • 11(58) • 2024 • pp. 1-16 • ISSN 2543-6821 • DOI: 10.2478/ceej-2024-0001 6
en i ies based on he algo i hms used. Howe e , i is
necessa y o emind he eade ha MPM may no
necessa ily be compa able be ween en i ies o a oid
di ec compa ison o measu es wi h he same name
wi hou checking how hey we e calcula ed. Also, he
company mus ou line he changes o how MPM was
p esen ed o calcula ed be ween successi e yea s i
any changes we e made.
Fu he , he en i y is o explain easons o
including speci ic measu es such as MPM, ocusing
on i s use ulness o he use o inancial s a emen s.
Al hough he scope o MPM is limi ed o inancial
in o ma ion and incomes and expenses only, he link
be ween pe o mance esul s and he en i y’s s a egy
and/o sho - e m en i y’s objec i es a icula ed by
in es o s, p oduc s’ g oupings (o asso men s), o a
sale’s geog aphical di e en ia ion can be desc ibed.
New inancial and in es ing segmen s in p o i -and-
loss s a emen s show p ospec s o disclose MPM
in o ming abou hese ac i i ies in he o m o
e enues and expenses om inancial and in es ing
manage ial decisions.
4.2. Reconcilia ion be ween MPM and
he Mos Di ec ly Compa able Sub o al
Speci ied by IFRS
As he e is a equi emen o each MPM disclosed in
he inancial epo o p o ide a econcilia ion, an
example is p esen ed in Figu e 4.
In he example p esen ed in Figu e 4, he adjus ed
ope a ing p o i in MPM disclosed in he inancial
epo is a managemen iew o ope a ing p o i ,
excluding inciden al es uc u ing in coun y X.
Th ough sub ac ion o es uc u ing cos s and
e enue adjus men s, i is econciled o he mos
di ec sub o al, which in his case is ope a ing p o i .
The wo igh columns a ec income ax and non-
con olling in e es s (la e e e ed o as NCIs), as he
en i y is also obliga ed o include hese e ec s o each
econcilia ion.
The new s anda d does no include a g aphical
sample o he econcilia ion. Du ing he discussion
a he IASB mee ing in July 2023, he e seemed o be
an ag eemen ha he s anda d would no equi e one
speci ic me hodology wi h ega ds o econcilia ions
bu migh p opose examples o ease he p ocess o
en i ies ha ing ouble accommoda ing he di e ences
Reconcilia ion
Reconcilia ion be ween MPM and he mos di ec ly compa able sub o al o
o al speci ied by IFRS Accoun ing S anda ds, including he income ax
e ec and e ec on non-con olling in e es s
Why an MPM
communica e s
managemen 's iew
Includes an explana ion o how he MPM is calcula ed and how he
measu e p o ides use ul in o ma ion abou he en i y's pe o mance.
Explana ion should e e o indi idual econciling i ems whe e necessa y
No necessa ily
compa able wi h o he
en i ies
A s a emen ha MPM p o ides managemen 's iew o an aspec o he
en i y's inancial pe o mance and is no necessa ily compa able wi h
measu es p o ided by o he en i ies
Changes in calcula ion
Explana ion o and easons o any changes in how he en i y calcula es i s
MPMs o which MPMs i p o ides
Disclosu e equi emene s o MPMs
Figu e 3. Requi ed Disclosu es Rega ding MPM
Sou ce: Own elabo a ion based on FASB IASB Join Educa ional Mee ing (2022, Sep embe )
CEEJ • 11(58) • 2024 • pp. 1-16 • ISSN 2543-6821 • DOI: 10.2478/ceej-2024-0001 7
be ween MPM and he mos di ec ly compa able
sub o al speci ied by IFRS. One o he poin s was o
he new me hodology was o show he MPM i s (a
he op), which hen ge s econciled o a sub o al.
4.3. Tax E ec on Reconciled I ems
Ano he opic discussed was he p oposal o include
he ax e ec o econciled i ems. On he one hand,
ax e ec was eques ed by he use s o inancial
s a emen s. I was s ongly oiced as necessa y o
s eng hen he eliabili y o inancial s a emen s and
he abili y o analyse hem p ope ly. On he o he hand,
p epa e s oiced di icul y in calcula ing he ax e ec ,
which may be a ec ed by many ac o s ha migh be
di icul o explain o he use o inancial s a emen s
and hence ac ually hu he ai h ul ep esen a ion
and ele ance. To sa is y bo h sides, IASB en a i ely
decided o include a equi emen o show he ax e ec
on econciled i ems bu o allow simpli ica ion o his
by applying ei he (IFRS Accoun ing, 07.2023):
• S a u o y ax a e(s) applicable o unde lying
ansac ion(s) in he ele an ju isdic ion(s), o ,
• easonable p o a a alloca ion o he cu en and
de e ed ax, o ,
• ano he me hod achie ing a mo e app op ia e
alloca ion due o speci ic ci cums ances.
I espec i e o he chosen me hodology, he
en i y ough o explain how he income ax e ec was
calcula ed and should be p esen ed sepa a ely o each
i em i mo e han one me hod was used.
In summa y, he o e all desc ip ion o MPM
in he planned s anda d does no p o ide de ailed
in o ma ion abou wha should be disclosed as
MPM. Ins ead, i ocuses on a amewo k (o model
app oach), as s anda ds used o be. This, on he one
hand, lea es oom o managemen o decide wha o
choose as MPM and o show managemen ’s iew on
he en i y’s pe o mance, allowing o selec ed, and
no e y de ailed in o ma ion. On he o he hand,
i unde lines ha an indi idual app oach di ec ed
a high-quali y MPM is c ucial o use s o inancial
s a emen s, and i should guide a manage when
making decisions. F om he p epa e s’ poin o iew,
he decision abou MPM should encompass echnical
issues as a possibili y o make de ailed econcilia ion,
including he ax issues.
5. Case S udy
The case s udy is based on company A, whose da a we e
d awn om accoun ing books o h ee consecu i e
yea s, om 2020 o 2022. The company chosen o his
case s udy p epa es i s inancial da a ollowing IFRS
o consolida ion pu poses only. The da a p esen ed
in he case s udy we e anonymised, main aining
he scale o signi icance o indi idual ansac ions
discussed in he case s udy. In his empi ical pa ,
he p ojec o he upcoming IFRS s anda d will be
ecalled as “IFRS X”. Company A uses p esen a ion pe
unc ion o p o iding ope a ing cos s in i s s a emen
o inancial pe o mance and decided o dis inguish
he g oss p o i . Fo he h ee analysed pe iods, he
company paid he income ax a a lowe e ec i e a e
han he nominal ax a e because i was g an ed a ax
exemp ion o in es ing in a special economic zone.
The sho e sion o he cu en s a emen o inancial
pe o mance as pe IAS 1 is p esen ed in Table 1.
To be able o p esen he no es ega ding MPMs,
he e is a need o p esen a ans o med s a emen
o inancial pe o mance in acco dance wi h new
IFRS X guidelines and explain he main di e ences.
T ans o med da a om company A a e p esen ed in
Table 2.
When compa ing s a emen s o inancial
pe o mance p epa ed pe IAS 1 and IFRS X, he
i s di e ence wo h no ing is an in oduc ion
o addi ional segmen s: in es ing and inancing.
Adjus ed ope a ing p o i (MPM) 60,000 Tax e ec NCI
- Res uc u ing in Coun y X (incl. In employee bene i s) -5,000 1,000 -800
- Re enue adjus men (incl. in e enue) -6,000 1,200 -
Ope a ing P o i (IFRS-speci ied) 49,000
Figu e 4. Reconcilia ion o he MPM
Sou ce: Own elabo a ion based on FASB IASB Join Educa ional Mee ing (2022, Sep embe )
CEEJ • 11(58) • 2024 • pp. 1-16 • ISSN 2543-6821 • DOI: 10.2478/ceej-2024-0001 8
Table 1. S a emen o Financial Pe o mance o 2020–2022 in Acco dance Wi h IAS 1
Yea (amoun s in PLN) 2022 2021 2020
Re enue om he sale o goods 22,132,991 16,381,185 11,589,068
Cos o goods sold –15,447,701 –11,298,542 –8,178,590
G oss p o i 6,685,290 5,082,644 3,410,478
O he income 410,245 201,756 414,358
Selling expenses –1,701,360 –1,192,527 –914,645
Gene al and adminis a i e expenses –2,554,044 –2,208,843 –1,738,436
O he expenses –453,009 –399,870 –514,536
Finance cos s –8,058 –10,119 –153
P o i be o e ax 2,379,064 1,473,041 657,067
Income ax expense 128,469 154,669 57,164
P o i o he yea om con inuing ope a ions 2,250,595 1,318,372 599,903
Loss o he yea om con inuing ope a ions 0 0 0
P o i o he yea 2,250,595 1,318,372 599,903
Sou ce: Own elabo a ion
Table 2. T ans o med S a emen o Financial Pe o mance o 2020–2022 in Acco dance Wi h IFRS X
Yea (amoun s in PLN) 2022 2021 2020
Re enue om he sale o goods 22,132,991 16,381,185 11,589,068
Cos o goods sold –15,447,701 –11,298,542 –8,178,590
G oss p o i 6,685,290 5,082,644 3,410,478
O he income 265,245 102,756 376,358
Selling expenses –1,701,360 –1,192,527 –914,645
Gene al and adminis a i e expenses –2,554,044 –2,208,843 –1,738,436
O he ope a ing expenses –444,009 –401,108 –510,036
Ope a ing p o i 2,251,122 1,382,922 623,720
In es men income 145,000 99,000 38,000
In es men cos s –9,000 –6,000 –4,500
P o i be o e inancing and income ax 2,387,122 1,475,922 657,220
Finance income 0 0 0
Finance cos s –8,058 –2,882 –153
P o i be o e ax 2,379,064 1,473,041 657,067
Income ax expense 128,469 154,669 57,164
P o i o he yea om con inuing ope a ions 2,250,595 1,318,372 599,903
Loss o he yea om con inuing ope a ions 0 0 0
P o i o he yea 2,250,595 1,318,372 599,903
Sou ce: Own elabo a ion
CEEJ • 11(58) • 2024 • pp. 1-16 • ISSN 2543-6821 • DOI: 10.2478/ceej-2024-0001 15
EFRAG IASB Join Online Round able. Wha
a e he implica ions o ecen IASB decisions on p ima y
inancial s a emen s? (2022, No embe 15). h ps://www.
e ag.o g/News/Mee ing-502/PROGRAMME-
EFRAG-IASB-online- ound able---Wha -a e- he-
implica ions-o - he- ecen -IASB-decisions-on-
P ima y-Financial-S a emen s-15-No embe -2022
FASB IASB Join Educa ional Mee ing. (2022,
Sep embe ). h ps://bi .ly/FASB-IASB-09-2022
Gomoi, B. C., & Pan ea, M. F. (2016). The impac
o signaling heo y and agency heo y on he inancial
epo ing. Luc ă i Ş iinţi ice Managemen Ag icol, 18(2), 199–
202. h ps://lsma. o/index.php/lsma/a icle/ iew/860
Ha ison, P. D., & Ha ell, A. (1993). Impac o
“ad e se selec ion” on manage s’ p ojec e alua ion
decisions. Academy o Managemen Jou nal, 36(3),
635–643.
Ha mann, B., Ma on, J., & Söde s öm, R.
(2018). The imp obabili y o aud in accoun ing
o de i a i es: A case s udy on he bounda ies o
inancial epo ing compliance. Eu opean Accoun ing
Re iew, 27(5), 845–873. h ps://doi.o g/10.1080/09638
180.2018.1494022
Hol hausen, R. W. (1990). Accoun ing me hod
choice: Oppo unis ic beha io , e icien con ac ing,
and in o ma ion pe spec i es. Jou nal o Accoun ing
and Economics, 12(1–3), 207–218. h ps://doi.
o g/10.1016/0165-4101(90)90047-8
IFRS Accoun ing. Accoun ing S anda ds Ad iso y
Fo um Mee ing. S a pape . (2023, July). h ps://bi .ly/
IFRS-07-2023
IFRS Founda ion. IFRS comple es echnical
wo k on wo new IFRS Accoun ing S anda ds. (2023,
July 26). h ps://www.i s.o g/news-and-e en s/
news/2023/07/iasb-comple es- echnical-wo k-on-
wo-new-i s-accoun ing-s anda ds/
IFRS Founda ion. IFRS s anda ds exposu e d a
ED/2019/7: Gene al p esen a ion and disclosu es. (2019,
Decembe ). h ps://cdn.i s.o g/con en /dam/i s/
p ojec /p ima y- inancial-s a emen s/exposu e-
d a /ed-gene al-p esen a ion-disclosu es.pd
IFRS Founda ion. P ima y inancial s a emen s.
(2023). h ps://www.i s.o g/p ojec s/wo k-plan/
p ima y- inancial-s a emen s/#cu en -s age
Jassim, A., Dex e , C. R., & Sidhu, A. (1988). Agency
heo y: Implica ions o inancial managemen .
Manage ial Finance, 14(4), 1–5. h ps://doi.o g/10.1108/
eb013600
Kadous, K., Koonce, L., & Thayle , J. M. (2012).
Do inancial s a emen s use s judge ele ance based
on p ope ies o eliabili y? The Accoun ing Re iew,
87(4), 1335–1356. h ps://doi.o g/10.2308/acc -50157
Kaplan, R., & No on, D. (1992). The balanced
sco eca d: Measu es ha d i e pe o mance. h ps://
hb .o g/1992/01/ he-balanced-sco eca d-measu es-
ha -d i e-pe o mance-2 (O iginal wo k published
in 1992).
Kenne ly, M., & Neely, A. (2003). Measu ing
pe o mance in a changing business en i onmen .
In e na ional Jou nal o Ope a ions & P oduc ion
Managemen , 23(2), 213–229. h ps://doi.
o g/10.1108/01443570310458465
Khan, S., Khan, H., & Khan, F. (2019). Fi ms
audi commi ee and ex e nal audi o in luence on
accoun ing conse a ism and i m’s pe o mance.
In e na ional Jou nal o Managemen , Accoun ing &
Economics, 6(1), 22–47.
Knoebe , Ch. R., & McKee J ., A. J. (1991).
Accoun ing choice: The ole o moni o ing cos .
Manage ial and Decision Economics, 12(5), 353–360.
h ps://doi.o g/10.1002/mde.4090120503
Lambe , R., Leuz, Ch., & Ve ecchia, R. E. (2007).
Accoun ing in o ma ion, disclosu e, and he cos o
capi al. Jou nal o Accoun ing Resea ch, 45(2), 385–420.
h ps://doi.o g/10.1111/j.1475-679X.2007.00238.x
Liang, J., Yang, S., & Xia, Y. (2023). The ole o
inancial slack on he ela ionship be ween demand
unce ain y and ope a ional e iciency. In e na ional
Jou nal o P oduc ion Economics, 262, 108931. h ps://doi.
o g/10.1016/j.ijpe.2023.108931
Lynch, R. L., & C oss, K. F. (1991). Measu e-Up:
The essen ial guide o measu ing business pe o mance.
Manda in.
Macin osh, N., Shea e , T., Tho on, D. B., &
Welke , M. (2000). Accoun ing as simulac um and
hype eali y: Pe spec i es on income and capi al.
Accoun ing, O ganisa ions and Socie y, 25, 13–50. h p://
www.sciencedi ec .com/science/a icle/pii/S0361-
3682(99)00010-0
Macin osh, N. B. (2009). Accoun ing and he u h
o ea nings epo s: Philosophical conside a ions.
Eu opean Accoun ing Re iew, 18(1), 141–175. h ps://doi.
o g/10.1080/09638180802327073
Ma ilen, P., Fla ia, B., & Lucia, N. M. (2013). The
ins i u ional in es o s’ beha iou unde he impac
o he global inancial c isis. Annals o he “Cons an in
CEEJ • 11(58) • 2024 • pp. 1-16 • ISSN 2543-6821 • DOI: 10.2478/ceej-2024-0001 16
B âncuşi” Uni e si y o Tâ gu Jiu, 1, 285–292. h p://
www.u gjiu. o/ e is a/ec/pd /2013-01/39_Pi ea%20
Ma ilen,%20Ba na%20Fla ia.pd
Ma uszewska, E. W., Niesiobędzka, M., &
Kołodziej, S. (2023). Why is i so ha d o p o ide
a ai h ul ep esen a ion? The impac o indi ec ly
e oked incen i es on he accoun ing policy decision
and he accoun an ’s subsequen pos -decision
dis o ion. Medi a i Accoun ancy Resea ch. Ad ance
online publica ion. h ps://doi.o g/10.1108/MEDAR-
11-2021-1505
Ma opulo, O., Rapp, M. S., & Udoie a, I. A.
(2021). Value-based managemen con ol sys ems and
he dynamics o wo king capi al: Empi ical e idence.
Managemen Accoun ing Resea ch, 52, h ps://doi.
o g/10.1016/j.ma .2021.100740
Micheli, P., & Ma i, L. (2014). The heo y and
p ac ice o pe o mance measu emen . Managemen
Accoun ing Resea ch, 25(2), 147–156. h ps://doi.
o g/10.1016/j.ma .2013.07.005
Mo is, R. B. (1987). Signalling, agency heo y
and accoun ing policy choice. Accoun ing and Business
Resea ch, 18(69), 47–56. h ps://api.seman icschola .
o g/Co pusID:154914982
Neely, A. (Ed.) (2002). Business pe o mance
measu emen . Theo y and p ac ice. Camb idge Uni e si y
P ess.
Neely, A., Mills, J., Pla s, K., Richa ds. H., G ego y,
M., Bou ne, M., & Kenne ly, M. (2000). Pe o mance
measu emen sys em design: De eloping and es ing
a p ocess-based app oach. In e na ional Jou nal o
Ope a ions & P oduc ion Managemen , 20(10), 1119–1145.
h ps://doi.o g/10.1108/01443570010343708
Palas, R., Solomon, D., Ga ni, D., & Baum, I. (2023).
Does wedge size ma e ? Financial epo ing quali y
and e ec i e egula ion o dual-class i ms. Finance
Resea ch Le e s, 54, 103774. h ps://doi.o g/10.1016/j.
l.2023.103774
Ross, S. A. (1973). The economic heo y o agency:
The p incipal’s p oblem. Decision Making unde
Unce ain y, 63(2), 134–139.
Ta icchi, P., Tonelli, F., & Cagnazzo, L. (2009).
A decomposi ion and hie a chical app oach o
business pe o mance measu emen and managemen .
Measu ing Business Excellence, 13(4), 47–57. h ps://doi.
o g/10.1108/13683040911006783
Van de Hauwae , E., Hoozée, S., Maussen, S.,
& B uggeman, W. (2022). The impac o enabling
pe o mance measu emen on manage s’ au onomous
wo k mo i a ion and pe o mance. Managemen
Accoun ing Resea ch, 55 100780. h ps://doi.
o g/10.1016/j.ma .2021.100780
