FASB Invites Comments on its Disclosure Framework
In order to enhance the effectiveness of the disclosures proposed to financial statements, The Financial Accounting Standards Board (FASB) has invited comments on its proposed Disclosure Framework from investors.
For the past couple of years, FASB has been working really hard to design Disclosure Framework in its bid to minimize disclosure overload as well as make financial statement related disclosures more relevant to the investors. On Monday, the board resolved to stop its loss contingencies disclosure project, in part in view of its work on the overload extended Disclosure Framework.
FASB’s decision to invite comments is the first step in soliciting inputs on ways in which disclosure effectiveness can be improved. The document that was released on Thursday addressing topics including decision process that can assist FASB in establishing disclosure needs, which further addresses only that information which are relevant.
It also offers flexible disclosure needs, which could have been adapted by each and every reporting firm to focus on relevant information in its specific situations. A well designed and judgment framework can assist each reporting firm identify the disclosures that are relevant in its specific situations.
Through the document, FASB has asked for feedback on organization and techniques for formatting that can make the information required by users easy to find and comprehend. The document has also discussed requirements for disclosure for interim period financial statements.
The document doesn’t propose any particular changes but it does suggest quite a few possibilities which FASB believes can result in more effective disclosures by reporting firms.
As and when the framework reaches a sufficient development level, FASB will apply the framework to current standards. By applying the framework to current standards, FASB will be able to modify current requirements or establish new ones. Any similar changes will be open for public comment.
Even the European Financial Reporting Advisory Group that offers advice to the European Commission on matters pertaining to the application of International Financial Reporting Standards in the European Union is also working on a same kind of disclosure framework project.