IASB Disclosure Projects
The IASB’s has a number of projects underway to improve the effectiveness of disclosures in the financial statements. The FRC is monitoring these projects and responding to the IASB’s consultations.
Principles of Disclosure
The objective of this research project is to improve existing guidance in IFRS that helps entities determine the basic structure and content of a complete set of financial statements. The focus is on reviewing the general requirements in IAS 1 Presentation of Financial Statements, and considering how they may be revised. The aim is to develop a Disclosure Standard that improves and brings together the principles for determining the basic structure and content of the financial statements, in particular the notes.
The research covers a number of areas including disclosure principles for effective communication and the organisation, placement, format and linkage of information, similar to the principles set out in the FRC’s Guidance on the Strategic Report. The IASB is also exploring an objective-based approach to drafting disclosure requirements, that has been developed with the assistance of the New Zealand Accounting Standards Board.
The FRC is closely monitoring the progress of this project and has been providing input to the IASB. The IASB published its Principles of Disclosure Discussion Paper in April 2017.
Standards level review of disclosure
The objective of this project is to develop a drafting guide for the IASB to use when setting disclosure requirements in new and amended Standards, based on the principles being developed in the Principles of Disclosure project. The project may also identify targeted improvements to disclosure requirements in existing Standards, where conflicts, duplication and overlaps are identified.
The IASB is considering how materiality is applied in practice in IFRS financial statements. In June 2014, the FRC responded to a request from the IASB on the application of materiality in the UK.
The IASB has tentatively decided to provide guidance on the application of materiality in the form of a Practice Statement. In January 2016 the FRC published its comment letter to the IASB's Exposure Draft ED/2015/8 IFRS Practice Statement: Application of Materiality to Financial Statements. The IASB is consider the comments received on the draft Practice Statement and aims to publish the final Practice Statement in September 2017.
Amendments to IAS 1 Presentation of Financial Statements
The IASB made narrow-scope amendments to IAS 1 Presentation of Financial Statements, intended to address some of the concerns expressed about existing presentation and disclosure requirements and to ensure entities are able to use judgement when preparing their financial statements.
In July 2014 the FRC published its comment letter to the IASB’s Exposure ED/2014/1 Disclosure Initiative: Proposed Amendments to IAS 1. The IASB published the final Standard Disclosure Initiative: Amendments to IAS 1 in December 2014. It is effective for periods beginning on or after 1 January 2016, with earlier application permitted.
Amendments to IAS 7 Statement of Cash Flows
The IASB made narrow-scope amendments to IAS 7 Statement of Cash Flows requiring disclosure of changes in liabilities arising from financing activities, including changes arising from cash flows and non-cash changes, excluding the changes in contributed equity. In practice, this disclosure will usually take the form of a reconciliation, similar to the debt reconciliations already provided by many UK companies on a voluntary basis.
In March 2015, the FRC published its comment letter to the IASB’s Exposure Draft ED/2014/6 Disclosure Initiative: Proposed amendments to IAS 7. In January 2016 the IASB published the final Standard Disclosure Initiative: Amendments to IAS 7—2016. It is effective for periods beginning on or after 1 January 2017, with earlier application permitted.
Project Director: Rosalind Szentpéteri