The International Accounting Standards Board (IASB) has completed its Targeted Standards-level Review of Disclosures project, part of its wider Disclosure Initiative scheme of work.
With the completion of this project the IASB has published Guidance for developing and drafting disclosure requirements in IFRS Accounting Standards. This new guidance is designed to help the IASB develop IFRS Accounting Standards that allow companies to make better judgements about which information is material and should be disclosed to investors.
The updated approach suggests the IASB should engage early with users of financial statements to understand their information needs; develop disclosure requirements alongside recognition and measurement requirements, as well as consider the digital reporting implications of new disclosure requirements.
The guidance also recommends using general and specific disclosure objectives that describe and explain users’ information needs and support specific disclosure objectives by requiring entities to disclose items of information that would satisfy these objectives in most cases.
The guidance provides the IASB with a framework for developing and drafting disclosure requirements in IFRS Accounting Standards. The rationale of the guidance is that such disclosure requirements will provide users of financial statements with useful information at a cost that does not exceed the benefits of its provision.
Sarah Dunn, Senior Manager, Corporate Reporting said: “ICAEW has been a strong supporter of the IASB’s Disclosure Initiative and its continued efforts to improve the effectiveness of disclosures provided in financial statements prepared in accordance with IFRS. We welcome the publication of guidance that outlines the IASB’s improved approach to developing disclosures.
“In particular, we are pleased to see the emphasis placed on the IASB working more closely with users of financial statements early in the standard-setting process to understand what information they need before developing disclosure requirements.”
The Targeted Standards-Level Review is one of several Disclosure Initiative projects designed to improve disclosures in financial statements. Only one Disclosure Initiative project remains: Subsidiaries without Public Accountability.
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