Seeing the bigger picture.
For some time, preparers have been asking for ways to de-clutter financial
statement disclosures. Meanwhile, users want preparers to provide more
company-specific information, making the financial statements more relevant to their business and telling a coherent story.
The International Accounting Standards Board (IASB) has factored these
concerns into its ‘disclosure initiative’, which aims to improve presentation
and disclosures in financial reporting.
To address some of the perceived problems with current disclosure
requirements, on 18 December 2014 the IASB published clarifications to IAS 1 Presentation of Financial Statements.
These narrow-scope amendments are effective for periods beginning on or after 1 January 2016. However, early adoption is allowed. Тhe amendments have not yet been endorsed by the European Union.
But the amendments do not require any significant change to current practice. Only by keeping the bigger picture in mind, and avoiding a boilerplate, checklist approach to financial statement disclosures, can preparers achieve the improved reporting sought by these clarifications.
Key clarifications to IAS 1
The road ahead
As part of the disclosure initiative’s short-term projects to improve disclosures, the final amendments to IAS 1 are joined by proposed amendments to IAS 7 Statement of Cash Flows, which propose:
In addition, the IASB has planned medium-term research projects:
More broadly, the IASB is considering presentation and disclosure as part of its revisions to its Conceptual Framework for Financial Reporting. The disclosure initiative complements the Board’s efforts in this respect.