Background

The IASB formally added an initiative on disclosure to its work programme in December 2012 to complement the work being done in the Conceptual Framework project. The initiative is made up of a number of smaller projects that aim at exploring opportunities to see how presentation and disclosure principles and requirements in existing Standards can be improved. Among them is a narrow scope project on IAS 1 Presentation of Financial Statements to ensure that entities are able to use judgement when presenting their financial reports as the wording of some of the requirements in IAS 1 had in some cases been read to prevent the use of judgement.

Suggested changes

The IASB proposes in ED/2014/1 Disclosure Initiative (Proposed amendments to IAS 1) amendments in four areas that seem to impede the use of judgement:

• Materiality. The IASB proposes clarifications that are aimed at emphasising (1) that information should not be obscured by aggregating or disaggregating information, (2) that materiality considerations apply to the all parts of the financial statements, and (3) that even when a Standard requires a specific disclosure materiality considerations do apply.
• Statement of financial position and statement of profit or loss and other comprehensive income. The IASB proposes to introduce (1) a clarification that the list of line items to be presented in these statements can be disaggregated and aggregated as relevant and (2) additional guidance on subtotals in these statements.
• Notes. The IASB proposes to clarify (1) that the understandability and comparability should be considered when determining the order of the notes and (2) that the notes need not be presented in the order listed in paragraph 114 of IAS 1.
• Accounting policies. The IASB proposes to remove guidance and examples with regard to the identification of significant accounting policies that are perceived as being potentially unhelpful.

The IASB has also included one proposal that arose from a submission to the IFRS Interpretations Committee:

• Presentation of items of OCI arising from equity-accounted investments. The IASB proposes to clarify that an entity's share of OCI of equity-accounted associates and joint ventures should be presented in aggregate as single line items based on whether or not it will subsequently be reclassified to profit or loss.

Transition requirements and effective date

The ED does not contain a proposed effective date. Also, no specific transition provisions are included in the ED.

Additional information

Please click for:

• IASB press release (link to IASB website)
• Access to the exposure draft on the IASB website
• Deloitte's IFRS in Focus newsletter explaining the amendments
• Our IAS Plus project page on IAS 1 — Disclosure initiative