Under the exposure draft, the following three types of information may appear in notes to financial statements and should not be provided on the face of the financial statements alone:

• Information about specific line items.
• General information about the nature of the entity, its activities, any special restrictions or privileges that apply to it, and other advantages and disadvantages relative to other entities.
• Information about past events and current circumstances and conditions that will or may affect future cash flows but have not affected a line item.

Types of information that should not be required in the notes include:

• Information that is relevant to providers of resources to a significant number of entities.
• Information whose disclosure is subject to cost constraints.
• Certain future-oriented information (e.g., predictions of outcomes that are outside the control of the entity), except for the following information that may be important:
  • Estimates and assumptions used as inputs to measurements.
  • Existing plans and strategies related to matters under management’s control.
  • The effect of specified future changes in existing conditions on specific line items or on the entity as a whole.

If approved, this exposure draft will become a new chapter in Concepts Statement No. 8, Conceptual Framework for Financial Reporting.

The comment deadline is 14 July 2014.

Disclosures are currently much discussed internationally and have seen many studies and report published – most recently the AASB paper on materiality in disclosure and the ICAEW report calling for changes to disclosure rules. Although much of the criticism around the perceived disclosure overload is levelled at preparers, auditors and regulators and their ‘tick box’ mentality, the IASB Chairman Hans Hoogervorst has noted in his announcement of the IASB’s 10-point plan in relation to disclosures that a change in mind set is needed in all parties involved, including the mind set of the standard-setters. Consequently, the IASB taken up two projects on disclosures: a short-term disclosure initiative aimed at improving the wording and requirements in IAS 1 Presentation of Financial Statements that lead preparers, auditors and regulators to contribute to the disclosure overload and a research project on a disclosure framework that is focused on broader challenges associated with disclosure effectiveness. The FASB’s decision process for evaluating what disclosures should be required shows what a more general, overarching approach for addressing the disclosure problem in the context of a disclosure framework could look like.

For more information, see:

• Deloitte's Heads Up newsletter.
• Press release, exposure draft, and FASB in Focus on the FASB website.