On July 12, the FASB issued an Invitation to Comment on developing an overarching framework to use in establishing requirements for disclosures in the notes to the financial statements. The FASB issued the Invitation to Comment as a first step in its outreach to solicit input on ways to improve financial statement disclosure effectiveness. This In brief article highlights the topics addressed in the Invitation to Comment and the board's next steps on the project.
On July 12, 2012, the Financial Accounting Standards Board (FASB or board) issued an Invitation to Comment on developing an overarching framework to use in establishing requirements for disclosures in the notes to the financial statements. The FASB issued the Invitation to Comment as a first step in its outreach to solicit input on ways to improve financial statement disclosure effectiveness.
The FASB added the disclosure framework project to its agenda to address concerns raised by stakeholders about the relevance and volume of information in the notes to the financial statements. Although reducing the volume of disclosures is not the primary objective of the project, the board believes the focus on communicating the information that is most important to financial statement users could result in reduced volume.
The Invitation to Comment addresses the following topics:
The Invitation to Comment suggests various strategies, seeks input on those strategies, and requests respondents to provide alternative ways to improve disclosure effectiveness.
The IASB does not currently have a disclosure framework project on its agenda. However, the European Financial Reporting Advisory Group (EFRAG), which provides advice to the European Commission on issues relating to the application of IFRS in the European Union, is working on a similar project and issued a Discussion Paper on July 12, 2012. The FASB and EFRAG have been sharing information and meeting periodically to discuss their projects.
The disclosure framework is intended to apply to public, private, and not-for-profit organizations.
Comments on the FASB's Invitation to Comment are due November 16, 2012. The FASB will conduct additional outreach with preparers, users, and auditors of financial statements in the coming months.
When the framework is established, the board plans to apply it to existing standards, which could result in modifications to existing requirements or create new requirements. The board will expose any such changes for public comment.
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