Date recorded:

Feedback statement from the EFRAG, ANC and FRC Discussion Paper Towards a Disclosure Framework for the Notes

Filippo Poli, a member of the EFRAG Technical Staff, presented the preliminary feedback analysis of the comments received on the EFRAG discussion paper.  Key messages at this stage included:

  • improving the way standards are expressed, so that what are examples of how requirements might be met do not become requirements themselves;
  • improving the application of materiality;
  • remembering that notes are intended to communicate information, not obscure it.

In response to a Council Member, Mr Poli stated that the EFRAG staff was now performing a second-level analysis to identify whether there was any consistency among groups of respondents (e.g., users or preparers).  The EFRAG staff noted that once complete, they would pass the completed survey, comments and analysis to the IASB as an input to the IASB’s disclosure framework project.  Hans Hoogervorst noted that EFRAG’s respondents had identified issues common to those identified by the IASB: the application of materiality and the need to ‘ignite’ behavioural change in preparers, [lawyers], regulators and auditors.


Recent IASB Activities

Dr Teixeira made a presentation of early stage activities on the IASB’s project to develop a disclosure framework, in particular its late-2012 survey of users and preparers on various disclosure issues and the public forum on disclosure held on 28 January 2013 in London.  He noted in particular that the short-term focus of the IASB would be on judgement around materiality and the relevance of disclosures.  In particular, Dr Teixeira noted that the IASB was open to make modifications to IAS 1 to modify some paragraphs that were perceived to be too inflexible and are preventing preparers from improving how they present information; and to clarify the purpose of IAS 1.31.  Other longer-term projects were also possible, including a separate project on materiality as well as a general review of disclosure requirements.

Many Council members made interventions in the subsequent discussion.  Among the comments were:

  • Regulators have an interest in this area and should be explicitly involved;
  • IFRSs should tie disclosure to what is important in the context of the entity’s business model: if it is important to the business, it will be material;
  • Many spoke in favour of targeted improvements to IAS 1

The Council Chairman summarised the discussions in the following way:

  • On the disclosure framework project generally, the IASB should be as inclusive as possible as regards outreach; it should involve those like EFRAG and the FASB, which have already done related work on a disclosure framework.  The IASB should also beware of ‘quick fixes’, but there was a high degree of support for targeted amendments to IAS 1.
  • The broader elaboration of materiality was a longer-term project and should involve all relevant players, including national standard-setters, EFRAG, the IIRC, IOSCO and the IAASB.  This issue would not be a ‘quick fix’.

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