The International Accounting Standards Board (IASB) today published a Feedback Statement summarising the discussions at a forum hosted by the IASB on financial information disclosure. At the same time, the IASB signalled its desire to serve as a catalyst for collective action by preparers, regulators, the accounting profession as well as the IASB to address ongoing concerns about the quality and quantity of financial reporting disclosure.
In January 2013, the IASB hosted a public forum to foster dialogue between preparers, auditors, regulators, users of financial statements and the IASB about how to improve the usefulness and clarity of financial disclosure. During the forum, representatives of these stakeholders groups debated the factors that have contributed to increases in the volume of financial information disclosures and a perceived reduction in the quality and usefulness of those disclosures. The discussions among participants indicated a broad consensus that collective action was required in order for improvements to be made.
The Feedback Statement summarises those discussions as well as the recommended actions resulting from them. With reference to its own responsibilities, the IASB intends to take action in three main areas:
- Amendments to IAS 1: The IASB will make narrow scope amendments to IAS 1 Presentation of Financial Statements to address perceived impediments to preparers exercising their judgement in presenting their financial reports.
- Materiality: The IASB will seek to develop educational material on materiality with input from an advisory group.
- Separate project on disclosure: The IASB will consider as part of its research agenda the broader challenges associated with disclosure effectiveness.
Hans Hoogervorst, Chairman of the IASB said:
Many organisations have written useful reports about ways to address problems with financial information disclosures. It is undoubtedly true that we and others can improve our requirements to alleviate some of the difficulties. However, material improvements will require behavioural change to ensure that financial statements are regarded as tools of communication rather than compliance. That means addressing the root causes of why preparers may err on the side of caution and ‘kitchen-sink’ their disclosures. The Feedback Statement published today describes our ambition to serve as a catalyst for leading that change.
Head of communications, IFRS Foundation
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