IASB Issues First Disclosure Initiative Update
Featuring projects for enhancing financial report information, the International Accounting Standards Board’s (“IASB”) Disclosure Initiative just received its first update. The update covers three topics, “Principles of Disclosure”, “Targeted Improvements to Disclosure Requirements” and “Materiality”.
An integral part of the Disclosure Initiative, the “Principles of Disclosure” project seeks to substitute three of the IASB’s current standards with one or more disclosure standards. The second topic, “Targeted Improvements to Disclosure Requirements”, relates to the IASB’s exposure draft of proposed amendments to IAS 1 Presentation of Financial Statements. Rather than change current IAS 1 requirements, the amendments would provide more clarity, as well as address alleged obstacles in applying materiality and deciding the organization of notes in financial statements. The IASB is also contemplating amendments to IAS 7 Statement of Cash Flows, which would mandate disclosing any changes in liabilities noted in financing activities on cash flow statements.
As for “Materiality”, its purpose is aiding the IASB in finding ways to help preparers, auditors and regulators apply the materiality concept to evaluating what should be disclosed in financial statements. The goal is also to make sure financial statement users recognize only those accounting policies deemed to be important to a specific entity.