The Financial Accounting Standards Board has issued a draft version of its long-awaited Disclosure Framework, aimed at improving its process for evaluating existing and future disclosure requirements in the notes to financial statements.
The exposure draft, Conceptual Framework for Financial Reporting: Chapter 8: Notes to Financial Statements (Concepts Statement), Concepts Statement, is the result of a broader project at FASB to improve the effectiveness of notes to financial statements. The document addresses the board’s process for identifying relevant information and the limits on information that should be included in notes to financial statements. If approved, the Disclosure Framework would become part of FASB’s Conceptual Framework, which provides the foundation for making standard-setting decisions.
“The proposed Concepts Statement is intended to aid the FASB in identifying what types of information the board should consider when deciding on required disclosures,” FASB chairman Russell G. Golden said in a statement. “We encourage our stakeholders to review and provide comment on the proposal, and let us know if they think it would help the board achieve our objective of improving the relevance of the information in those notes to investors and other financial statement users.”
As part of the proposed process, once the board has identified what should be broadly considered based on the concepts, FASB would identify information to be disclosed in the notes that is likely to be helpful to those making decisions about providing resources and that would be relevant to a significant number of the organizations to which it applies. FASB would also eliminate disclosures of certain types of future-oriented information that might have negative effects on the cash flow prospects of the reporting organization and its investors and creditors. In addition, FASB said it would consider the costs and potential consequences of providing a disclosure in the notes.
The proposed Concepts Statement also contains a discussion of what the board should consider when determining which disclosures should be required at interim periods for those companies who produce such statements.
FASB’s staff is in the process of compiling field study results as part of the second component of the Disclosure Framework project, which addresses the reporting entity’s decision process. FASB said it would also consider the feedback it received on the 2012 Invitation to Comment and the results from the field study when developing the entity’s decision process.
FASB is encouraging stakeholders to review and provide comment on the new exposure draft, Conceptual Framework for Financial Reporting: Chapter 8: Notes to Financial Statements (Concepts Statement), by July 14, 2014.
Register or login for access to this item and much more
All Accounting Today content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access