Standard-setters split on whether to prohibit non-IFRS information in financial statements

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Oct 19, 2017

In March 2017, the International Accounting Standards Board (IASB) published its discussion paper DP/2017/1 "Disclosure Initiative — Principles of Disclosure". Comments were requested by October 2, 2017 and 100 comment letters are now available on the IASB's website. An analysis shows that standard-setters are split on the question whether a general disclosure standard should prohibit an entity from including "non-IFRS information" or information that is inconsistent with IFRSs in its financial statements.

Some standard-setters are strictly against including any non-IFRS information in financial statements. Canada's AcSB argues that non-IFRS information "could undermine other information in the financial statements that conforms with IFRS Standards" and could "further reduce the relevance of financial statements". Mexico's CINIF ("we do not believe there are situations where 'non-IFRS information' is warranted").

Some standard-setters argue in favour of allowing information that is not IFRS information in financial statements. The UK FRC notes that it "does not support a principle which prohibits information".

Many standard-setters draw a line between non-IFRS information and information that is not consistent with IFRSs (with some of them again pointing out that it would be difficult to distinguish between the two types of information).

Other standard-setters again simply acknowledge that prohibiting non-IFRS information is impractical.

The middle ground is held by standard-setters who see pros and cons and weigh them carefully but who also stress two points: (i) in some jurisdictions there are legal requirements to include certain non-IFRS information in financial statements and (ii) IAS 1 already requires "to provide additional disclosures when compliance with the specific requirements in IFRSs is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity’s financial position and financial performance".

All comment letters cited or referred to are available on the IASB's website. The questions regarding non-IFRS information and information that is inconsistent with or contradicts IFRS information are questions 6 and 7.

Review the full article on our Global IAS Plus website.

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