The Financial Accounting Standards Board is inviting comments on its proposed Disclosure Framework, requesting input on ways to improve the effectiveness of disclosures in notes to financial statements.

FASB has been developing the Disclosure Framework in recent years to try to reduce disclosure overload and make financial statement disclosures more relevant to investors (see FASB Readies Framework for Financial Statement Disclosures and FASB Plans Public Discussions on Disclosure Framework).  The board decided Monday to discontinue its loss contingencies disclosure project, in part because of its work on the overarching Disclosure Framework.

The Invitation to Comment is FASB’s initial step in soliciting input on ways to improve disclosure effectiveness. The document released Thursday addresses topics such as a decision process that could aid FASB in establishing disclosure requirements that address relevant information and only relevant information. It also provides flexible disclosure requirements that could be adapted by each reporting organization to focus on information that is relevant in its specific circumstances. A judgment framework could help each reporting organization determine which disclosures are relevant in its specific circumstances.

The document asks for feedback on organization and formatting techniques that could make the information that users need easier to find and understand. The document also discusses disclosure requirements for interim-period financial statements.

The paper does not propose any specific changes but instead suggests a number of possibilities that FASB believes could lead to more effective disclosures by reporting organizations. FASB believes that establishing a framework for disclosure is an important first step before any specific changes to existing disclosure requirements are considered.

When the framework has reached a sufficient level of development, FASB intends to apply the framework to existing standards. Applying the framework to existing standards could eventually result in modifying existing requirements or establishing new ones. Any such changes would be exposed for public comment.

“Many stakeholders have expressed concerns about the relevance and sheer volume of information in notes to financial statements, and that some information is either missing or difficult to find,” said FASB chairman Leslie F. Seidman in a statement. “Therefore, the FASB is looking to improve its own procedures for establishing disclosure requirements and to provide a way for reporting organizations to exercise judgment about which disclosures are relevant to them. The ultimate goal is to enhance users’ abilities to analyze the information in the notes to financial statements while minimizing the burden on reporting organizations.”

The European Financial Reporting Advisory Group, which provides advice to the European Commission on issues relating to the application of International Financial Reporting Standards in the European Union, is working on a similar disclosure framework project. The EFRAG is working jointly with the French Accounting Standards Authority (Autorité Des Normes Comptables) and the Financial Reporting Council of the UK.

Before the conclusion of the comment period, FASB will conduct additional outreach with preparers, users, and auditors of financial statements to solicit their input on the proposal, including a webcast in the coming months. Further information including a podcast and a “FASB In Focus”— high-level summaries of the Invitation to Comment—will be available on the FASB Web site at www.fasb.org.