FASB Aims to Reduce Financial Statement Disclosures
Addressing complaints from companies and their auditors over the workload of financial statements, the Financial Accounting Standards Board (“FASB”) has made the decision to no longer require companies to disclose information on quarterly reports that was previously stated on annual reports. Announced at its recent meeting, the FASB’s decision is an effort to improve financial statement disclosures, eliminate information repetition and minimize the reporting burden on companies.
Per the decision, footnote disclosures in annual statements would be repeated in quarterly statements only if a “reasonable investor” viewed any new details as considerably altering the “total mix” of available information. If the decision is made final, it would be reflected in an updated version of Topic 270, Presentation—Interim Reporting (“Topic 270”). Six out of seven FASB members approved the decision; the member who submitted the disapproving vote is waiting to see the final wording of the update.
In addition, Topic 270 will be revisited at a future FASB meeting regarding an update covering feedback received on Proposed Statement of Financial Accounting Concepts No. 2014-200, Conceptual Framework for Financial Reporting—Chapter 8: Notes to Financial Statements. Also known as the “Disclosure Framework,” the proposal defines the FASB’s process in recognizing information to be listed in disclosure requirements and avoid creating rules that might overwhelm company financial statements with excess data. The FASB will be accepting comments on the proposal through July and seek to take all feedback into account.