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IASB To Examine 'Disclosure Overload'

by Jason Gorringe, Tax-News.com, London

19 November 2012


Accounting standards setter, the International Accounting Standards Board (IASB) has announced that is to hold an event in the New Year to discuss with preparers, auditors, regulators, and users of financial statements how to improve the usefulness and clarity of financial disclosures.

The Forum, scheduled for January 28, 2013, will bring together parties with an interest in financial report disclosures to enable the IASB to better understand the issues related to disclosure overload, and where and how improvements can be made. It will include presentations from invited speakers as well as panel and open discussions, and will focus on:

  • The current state of financial report disclosures;
  • Identifying and understanding the main concerns preparers, auditors, regulators and users have about disclosures in financial reports, and their possible causes; and,
  • Identifying potential ways that entities can improve the clarity of financial reports within the context of the current International Financial Reporting Standards (IFRS) requirements.

Input received will contribute towards the IASB's Conceptual Framework project, which aims to establish enhanced rules for the preparation and presentation of IFRS-compliant financial reports.

In launching the consultation, the IASB explained: "It is a widely-held view that not all of the information presented in financial statements is useful. Various factors are cited that affect the clarity and usefulness of disclosed information. Some are critical of what they see as overly burdensome financial reporting requirements. Others point to the application of "boilerplate" disclosure statements by companies, a "checklist" approach used by auditors or a need to meet the perceived "compliance" requirements of regulators."

Hans Hoogervorst, Chairman of the IASB, added: "It has become increasingly clear that we are suffering from disclosure overload. However, there are many reasons why this is the case. Standard-setters are not blameless, but neither are preparers, auditors or regulators. So, the idea is to get everybody in a room and see what we can do to address this topic."

"However, no one should expect quick wins," Hoogervorst cautioned. "One investor's disclosure clutter is another investor's golden nugget of information. Taking information away is never easy."

"We will proceed with caution, and build upon the impressive work that has already been done by others in this area," he concluded.

TAGS: compliance | tax | business | law | accounting | audit | International Accounting Standards Board (IASB) | international financial reporting standards (IFRS) | financial reporting | standards

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