The exposure draft contains proposed guidance for the IASB when developing and drafting disclosure requirements in IFRSs in future as well as proposed amendments to IFRS 13 Fair Value Measurement and IAS 19 Employee Benefits that result from applying the proposed guidance to those standards.

In its final comment letter, EFRAG supports the objective of the project to improve the relevance of disclosures and to develop a more rigorous methodology for the IASB to define objective-based disclosure requirements.  EFRAG also agrees, in particular, with the proposal to work closer with users of financial statements and other stakeholders early in the standard-setting process to understand what information they need, and to articulate better how such information is intended to be issued. 

However EFRAG concludes that based upon its extensive outreach, field testing and consultation conducted with European stakeholders, that the proposed approach may not achieve its intended objective.  In particular EFRAG highlights that the proposed approach is likely to:

• Be ineffective in addressing the disclosure problem and not result in providing more useful and relevant information and could even result in relevant information being omitted; 
• Result in impairing comparability for users of financial statements by introducing a more flexible approach to disclosures;
• Increase enforcement and audit challenges; and 
• Be more costly for preparers and their auditors.

In light of the above, EFRAG suggests an alternative approach which it considers to be less radical whereby the IASB would combine the introduction of overall and specific objectives with a list of items of disclosures always required (subject to materiality assessment) to meet those objectives.  This would be complemented by application guidance describing users' needs and illustrative examples showing how to apply judgements to meet the objectives under various circumstances and supporting preparers, auditors and enforcers to develop a common understanding about the application of objectives-based disclosures.

EFRAG also encourages the IASB to further consider the interactions between its proposed approach to develop disclosure requirements and:

• The role of the notes of the financial statements taken as a whole;
• The increasing use of technology and digital reporting;
• The application of the materiality concept; and
• The assessment of stewardship.

The press release the comment letter and the feedback statement are available on the EFRAG website.