NORWALK, Conn.--(BUSINESS WIRE)--The Financial Accounting Standards Board (FASB) today issued a proposed framework intended to improve its process for evaluating existing and future disclosure requirements in notes to financial statements. Stakeholders are encouraged to review and provide comment on the Exposure Draft, Conceptual Framework for Financial Reporting: Chapter 8: Notes to Financial Statements (Concepts Statement), by July 14, 2014.
The proposed Concepts Statement results from the FASB’s broader project to improve the effectiveness of notes to financial statements. Specifically, it addresses the Board’s process for identifying relevant information and the limits on information that should be included in notes to financial statements. If approved, it would become part of the FASB’s Conceptual Framework, which provides the foundation for making standard-setting decisions.
“The proposed Concepts Statement is intended to aid the FASB in identifying what types of information the Board should consider when deciding on required disclosures,” said FASB Chairman Russell G. Golden. “We encourage our stakeholders to review and provide comment on the proposal, and let us know if they think it would help the Board achieve our objective of improving the relevance of the information in those notes to investors and other financial statement users.”
As part of the proposed process, once the Board has identified what should be broadly considered based on the concepts, the FASB would:
- Identify information to be disclosed in the notes that is likely to be helpful to those making decisions about providing resources and that would be relevant to a significant number of the organizations to which it applies
- Eliminate disclosures of certain types of future-oriented information that may have negative effects on the cash flow prospects of the reporting organization and its investors and creditors, and
- Consider the costs and potential consequences of providing a disclosure in the notes.
The proposed Concepts Statement also contains a discussion of what the Board should consider when determining which disclosures should be required at interim periods for those companies who produce such statements.
The FASB staff is in the process of compiling field study results as part of the second component of the Disclosure Framework project, which addresses the reporting entity’s decision process. The FASB will consider stakeholder feedback on the 2012 Invitation to Comment and the results from the field study when developing the entity’s decision process.
About the Financial Accounting Standards Board
Since 1973, the Financial Accounting Standards Board has been the designated organization in the private sector for establishing standards of financial accounting and reporting. Those standards govern the preparation of financial reports and are officially recognized as authoritative by the Securities and Exchange Commission and the American Institute of Certified Public Accountants. Such standards are essential to the efficient functioning of the economy because investors, creditors, auditors, and others rely on credible, transparent, and comparable financial information. For more information about the FASB, visit our website at www.fasb.org.