The exposure draft, Addressing Disclosures in the Audit of Financial Statements, follows an earlier discussion paper, and proposes changes to a number of ISAs.

Key proposals include:

• Clarifying the meaning of the term "financial statements" to include all disclosures subject to audit, noting such disclosures may be found on the face of financial statements, included in related notes, and where permitted by the financial reporting framework, incorporated by cross-reference
• New application material to assist in the establishment of an appropriate focus on disclosures in the audit, and to bring forward consideration of disclosure to earlier in the audit process
• Enhancements to encourage a more robust risk assessment around disclosures, e.g. considering assertions for related disclosures when considering classes of transactions, events and account balances, considerations about the source of information for disclosures, and clarifying the nature of potential misstatements in disclosures (including non-quantitative disclosures)
• New application material to clarify and explain the expectations of an auditor when evaluating misstatements and forming an opinion, highlighting the types misstatements that might be identified, explaining that disclosure misstatements need to be accumulated, providing examples of disclosure misstatements that may impact the understandability of the financial statements, and how misstatement disclosures impact the evaluation of the presentation of the financial statements.

The IAASB acknowledges that the issues around disclosures are pervasive, and strongly linked to other initiatives, such as the IASB's disclosure initiative. The exposure draft notes:

In agreeing to this project, the IAASB acknowledged the view that many of the issues around disclosures cannot be solved by the IAASB alone. Moving forward in areas such as materiality will require collaboration and cooperation between many interested stakeholders, including accounting standard setters, regulators, preparers and users, for an effective response. The IAASB therefore has had active liaison and outreach with such stakeholders. For example, the IAASB has contributed to related initiatives of the International Accounting Standards Board (IASB), such as its work on disclosure frameworks and materiality. The IAASB will continue to closely follow relevant developments and activities of others to further inform its future activities.

Notwithstanding these observations, the IAASB believes the changes proposed in the exposure draft are necessary to proceed with "as an appropriate response to the concerns raised about the need to clarify the expectations of auditors when auditing financial statement disclosures, as well as to the need for additional guidance to assist auditors in addressing the practical challenges arising from the evolving nature of disclosures". In addition, the IAASB considers that the exposure draft's proposals to place a focus on disclosure earlier in the audit process may improve disclosures through companies also focusing on disclosures earlier in their financial statement preparation process.

The exposure draft is open for comment until 11 September 2014. Click for IAASB press release (link to IFAC website).

The agenda for the meeting is summarised below:

Agenda papers for this meeting will be made available on the IASB's website in due course.

The topics discussed were as follows (click through to access detailed Deloitte observer notes for each topic):

TUESDAY, 13 MAY 2014

Items for continuing consideration

• IFRS 11 – Analysis of implementation issues

Finalisation of tentative agenda decisions

• IFRS 11 – Classification of joint arrangements

Items for continuing consideration

• IAS 16 – Whether 'core inventories’ held in an entity’s own facilities are accounted for as inventories or as property, plant and equipment

Finalisation of tentative agenda decisions

• IFRS 2 – Price difference between the institutional offer price and the retail offer price for shares in an initial public offering
• IAS 12 – Recognition of deferred tax assets for unrealised losses
• IAS 12 – Threshold of recognition of an asset on uncertain tax position
• IAS 37 – Measurement of liabilities under IAS 37 within the context of emission trading schemes
• IAS 12 – Impact of an internal reorganisation on deferred tax

Click here to go to the preliminary and unofficial notes taken by Deloitte observers for the entire meeting. Notes from the remaining sessions will be posted in due course.

The interim release contains additional taxonomy concepts that reflect new IFRSs and improvements to IFRSs published by the IASB and technical updates and corrections. It includes taxonomy elements for IFRS 14 Regulatory Deferral Accounts, which was issued on 30 January 2014.

More details (and a link to the interim release) are available in the press release on the IASB website. Our dedicated XBRL page is here.

In October 2012, the Trustees approved an expansion of the membership of the SMEIG from 22 to a maximum of approximately 30 as of 1 July 2014, together with proposals to stagger the terms of membership from that date. In January 2014, they invited nominations of suitable candidates and also announced that approximately half of the 22 current members would be reappointed.

Today, the Trustees announced that 11 existing SMEIG members would be reappointed and 15 new members have been appointed. The 11 reappointed members will serve a final term of two years ending 30 June 2016. The 15 new members will serve a term of three years ending 30 June 2017. 4 seats have been kept empty in case suitable candidates are identified at a later date.

A full list of the 26 members of the SMEIG effective from 1 July 2014 is available in the press release on the IASB's website.

ESMA had published the proposed guidelines in February 2014 with the aim of improving the transparency and comparability of financial information, reducing information asymmetry among the users of financial statements, contributing to coherent use and presentation of alternative performance measures (APMs), and restoring confidence in the accuracy and usefulness of financial information.

In our comment letter, we note that we see the need to address the presentation of alternative performance measures (APMs) in various types of communications by issuers to the investors' community but we also point out that the debate is not restricted to Europa alone and especially mention the IFAC's draft guide on the use of supplementary financial measures also published in February 2014 and IASB's April 2014 decision to undertake a research project, as part of the disclosure initiative project, on the matter.

Regarding the proposed guidelines, our most significant concerns relate to the scope of documents to which the APM guidelines would apply as well as the type of APMs that would be captured in the proposed scope.

• We understand that the proposed guidelines may apply to a scope of documents larger than those that National Competent Authorities (NCAs) would usually review and we question how their application could be enforced if the scope of documents to which they apply goes beyond the reach of NCAs.
• We also believe that the scope of the guidelines is too broad regarding the types of APMs that would be captured. We suggest that the guidelines are limited to the presentation of, and information about, APMs that are financial measures that have been prepared using financial data underlying the preparation of an entity's historic, current or future financial statements.

In addition, we also believe that it is essential that users have transparent information on the level of external assurance, if any, attached to APMs presented.

Please click for access to the full comment letter.

The new members of the Committee are as follows:

• Carl Douglas, Corporate Controller, CCR Group (Brazil);
• Mikael Hagström, Head of Corporate Financial Reporting, Volvo Group (Sweden);
• Bruce Mackenzie, Managing Partner, W Consulting International (South Africa); and
• Bonnie Van Etten, Head of Fiat and Chrysler Group Global Technical Accounting and Accounting Research, Chrysler Group LLC (United States).

All appointments are for a three-year term, renewable once, and will commence on 1 July 2014.

In addition, Charlotte Pissaridou completes her term at the end of June 2014 and has been reappointed for a further three-year term.

Click for IFRS Foundation announcement (link to IASB website).