Disclosure initiative: Standards-level review of disclosures and amendments to IAS 7

Date recorded:

The IASB continued deliberations of the Disclosure Initiative Project. In this session, the staff presented a PowerPoint proposal for the initial phase of the project, on which the staff sought the views of the IASB. 

  • Objective and output of the project: The staff proposed that the IASB would develop a Drafting Guide for its internal use in setting out future amendments and or standards.
  • Issues with existing disclosure requirements: The agenda paper presented a summary of issues discussed in prior sessions related to the existing disclosure requirements (i.e. disclosure overload, overly prescriptive language, and absence of clear disclosure objectives in each standard).
  • Proposed approach for the initial phase of the project: The staff proposed to use feedback from the Principles of Disclosure Discussion Paper, which it was aiming to publish in the first quarter of 2016, to help with their work on (i) the objectives for notes disclosures and (ii) proposed redraft of disclosure requirements. The analysis would also include current disclosure requirements and FASB’s related projects. The staff would commence work on a Drafting Guide once the Discussion Paper has been published. That work would run alongside the development of a proposal during 2017 for a General Disclosure Standard and proposed amendments to disclosure requirements.
  • Proposed content of the Drafting Guide: The staff proposed that a Drafting Guide should include guidelines on writing disclosure requirements, processes to help applying the guidelines and tools to help implement the guidelines and processes. The Drafting Guide would be a living document which would be continuously updated and publicly available.
  • Next steps: The staff proposed to discuss potential steps to be taken following completing of the initial phase which could include the following options (i) focus only on new standards; (ii) focus on all standards; (iii) review current standards only for specific reasons: (iv) focus on target standards; (v) focus on additional drafting issues; or (vi) a combination of these options.


The Board supported the staff recommendations. There was general consensus that the drafting guide, and the possibility of having a set of tools and resources, would be very helpful for developing disclosure requirements in future standards.

There was extensive discussion regarding the use of particular words to require specific disclosures, for example “at a minimum”. Some Board members indicated that they expect that the Practice Statement on Materiality would help users to apply materiality more effectively; however, the Board still believed that the disclosure objectives should be more specific to the standard rather than boiler plate. The Chairman also pointed out that he did not expect that the Practice Statement on Materiality would solve on its own the existing issues regarding the application of materiality.

There was also discussion regarding the proposal that the drafting guide would be a living document and that it would be available to the public. The concerns expressed were related to (i) the need to permanently update the document and explain the changes; (ii) whether users would expect the Board to explain how they were applying the guidance on each new standard; (iii) whether it would be more useful to set target dates for updating the document instead of using the term “live” or whether it should be informally tested first before going public and (iv) even though the document would not be open for comments, it would still be necessary to obtain informal feedback.

In relation to the content of the guidance, it was suggested that the staff should not start from zero; rather they should start analysing existing guidance that could be available from standard setters and regulators. During the discussion it was suggested that in future Exposure Drafts, the Board could add specific questions to get feedback on the language being used and to take advantage of the upcoming PIR on IFRS 12 and 13 to get feedback on the disclosure requirements of those standards. The staff also clarified that the work already done by the New Zealand standard setter will be useful in developing the guide and they will analyse the feedback obtained and see whether it will help this project.

Amendments to IAS 7: Sweep issues — Agenda paper 11B

The objective of this session was to discuss sweep issues identified by the staff during the review of the pre-ballot draft. The staff concluded that the proposed amendments should not be re-exposed given that the issues identified were very narrow.  And further, the effective date should remain as 1 January 2017.  The staff expected to issue a ballot draft after the meeting.

The issues identified and the staff proposals were as follows:

  • Additional and supplementary information: The pre-ballot draft stated that an entity may disclosure supplementary information; the feedback received indicated that it was not clear how an entity could distinguish supplemental from mandatory information and what information could be included as supplemental. The staff agreed with these concerns and proposed to remove these recommendations from the text of IAS 7 but retained them in the Basis for Conclusions.
  • The need to disclose a reconciliation: The pre-ballot draft stated that an entity may provide a reconciliation to achieve the disclosure objective of the standard. The feedback received indicated that it was not clear as to whether a reconciliation should be provided because it seemed contradictory with the fact that the amendments also proposed a minimum content of the reconciliation. The staff agreed with these concerns and proposed to redraft the wording to state that the reconciliation is one way to fulfil the disclosure objective.
  • Minimum content of the reconciliation: The staff received concerns related to potential unintended consequences because the disclosure requirements seemed restrictive and there was confusion for the use of the terms may and shall. The staff agrees with these concerns and proposes wording changes on the text of the amendments.


The majority of the Board approved the staff recommendation. However, there was extensive debate on the following topics:

  1. Whether the reconciliation should be mandatory: Some Board members questioned whether the reconciliation was not made mandatory to avoid the concerns raised from the comment letters about the lack of clarity of the requirements. During the discussion the staff reminded the Board that the issue was already decided by the Board and it was not expected to be re-opened for discussion. It was also pointed out that the fact that the reconciliation was not mandatory was based on concerns raised for financial institutions. Another concern expressed was that in order to meet the objective a reconciliation was the only realistic way of providing the information  (unless the information was not material).
  2. How to differentiate mandatory from non-mandatory requirements: During the discussion some Board members indicated that if an entity decided to add supplemental information, it should be provided in extra lines subsequent to the minimum requirements set by the standard. There was general concern as to how the standard should be worded to make the objective clearer and to how distinguish required from supplemental information. There was another concern related that the clarification to permit supplemental information should not be made in the Basis for Conclusions, it should be made in the standard.

One Board member indicated that he would dissent because he disagreed with the direction of the amendments, particularly because the amendments should not be tied to IAS 7.

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