The Board discussed a proposed exposure draft developed by staff based on the discussions of the Board (November 2001 meeting) and its advisory committee (January and March 2002 meetings). The discussions were characterised as 'preliminary' and it was noted that the next meeting of the advisory committee was scheduled for September 2002.

The proposed scope of the standard is 'activity-based' - capturing all entities with deposit-taking, lending, and securities activities. Therefore, treasury functions in non-financial entities would be within its scope.

The Board supported an underlying principle of the risk-related disclosure that the disclosures should provide the user with a view 'through the eyes of management', albeit with specified minimum disclosures.

Significant points raised in this preliminary discussion included the following:

• The Board was concerned about the volume of requirements and resulting disclosure in the draft exposure draft. The detail seems somewhat inconsistent with a 'principle-based' approach to standards.
• The draft Standard seems to overlap with other disclosure requirements, particularly those in IAS 32 (as proposed to be revised).
• The Board was concerned that the proposed disclosure of 'operational risk' is too broad or too general. The Board will ask the project advisory committee to consider how much of the proposed disclosure should be included in the 'Management's Discussion and Analysis' rather than in the financial statements. Another possibility is to issue implementation guidance rather than a Standard.
• The Board will ask the advisory committee to revisit the definition of 'operational risk', in particular to remove overlap with other specified risk types, and to clarify the distinction between solvency and liquidity risk.
• More clarity in defining 'securities activities' is required.
• The Board was not convinced of the usefulness of the proposed balance sheet and income statement classifications and asked for greater clarity on how these would interact with IAS 1 and the performance reporting project.
• The Board expressed a tentative preference that the disclosures in the draft exposure draft be implemented as application guidance for IAS 32. IAS 32 would need to be reviewed to eliminate inconsistencies with the material coming from this project and to address overlaps and discontinuities. This might require a relatively pervasive review of that standard.
• The Board rejected the proposed exemption for wholly-owned subsidiaries. With such an exemption, disclosures would only be given at group level.