The International Accounting Standards Board (IASB) commenced a joint project with US Financial Accounting Standards Board (FASB) in 2004 to develop a standard for the presentation of information in the financial statements. The project initially focused on performance reporting, but in 2006 the boards agreed to widen the scope of the project to encompass all of the financial statements. The IASB had previously been carrying out a joint research project with the ASB to develop proposals for the presentation of information in the financial statements. The ASB continues to monitor and contribute to the work of the IASB and FASB on this project, both directly and via the work of EFRAG.

The IASB project has been divided into three phases.

Phase A
The first part of the project is intended to narrow differences between US GAAP and IFRS on what financial statements and comparatives are required.

IASB issued an exposure draft in March 2006. This would require a full set of financial statements to comprise an opening and closing balance sheet, a single statement of earnings and comprehensive income, a statement of changes in equity, and a cash flow statement; one year of comparatives would be required for all these (including comparatives for the opening balance sheet, so three balance sheets would be presented). The exposure draft would give the choice between presenting a single performance statement, and a separate income statement and statement of recognised income and expenditure. A final standard is expected in the second quarter of 2007.

The ASB issued a press notice welcoming the exposure draft and stating that no amendment to UK standards was being proposed.

Phase B
The second part of the project is intended to develop standards for the presentation on the face of the financial statements. The project is assisted by an advisory working group.

A discussion paper is planned for the first half of 2007.

Phase C
The third part of the project, which has not yet commenced, will address interim reporting.

Working with Europe

EFRAG and the European national standard setters are working together on a number of projects under the initiative known as ‘Pro-active Accounting Activities in Europe’ (PAAinE).

The Spanish standard-setter, the ICAC, together with EFRAG staff, has prepared a discussion paper issued by EFRAG in November 2006 titled ‘The performance reporting debate: what (if anything) is wrong with the good old income statement?’. This paper was developed with the assistance of comments and advice from the PAAinE Performance Reporting Advisory Group and sets out some initial issues for consideration in the debate on the format of the reporting statement. Copies are available at www.efrag.org.

Contact  Project Director: Simon Peerless