Final EFRAG draft comment letter on disclosure principles

  • EFRAG (European Financial Reporting Advisory Group) (dk green) Image

08 Jun 2017

The European Financial Reporting Advisory Group (EFRAG) has issued a final draft comment letter on the IASB discussion paper DP/2017/1 ‘Disclosure Initiative — Principles of Disclosure’.

The IASB published its DP for comment on 30 March 2017. Final comments are due to the IASB by 2 October 2017.

In its draft comment letter, EFRAG notes the IASB's "lack of progress" related to the disclosure initiative project as a whole because it "has not yet reached standards-level stage." The letter also states "EFRAG considers that the IASB DP’s description [of the 'disclosure problem'] lacks sufficient emphasis or focus to provide a clear sense of direction for the next phases of the project." The letter urges the IASB to prioritise the standards-level review of disclosure requirements.

Further, EFRAG considers 'disclosure overload' a main problem and notes its concern that the IASB's DP does not mention "the extent to which the proposals in the IASB DP might address concerns about disclosure overload." EFRAG also suggests that the focus of the IASB's principles of disclosure project not be limited to "the structure of the notes or the location of information but rather aim to develop principles to identify why, when and where information should be disclosed."

The draft comment letter goes on to state:

EFRAG is concerned about the lack of clarity in the overlap with other IASB projects, in particular the interactions with the Materiality and Primary Financial Statements projects. We are concerned that a piecemeal approach may create confusion for constituents on the boundaries of the various projects and we recommend that the IASB address these issues comprehensively within a single project.

EFRAG also laments that "a number of issues" identified in its joint 2012 DP, Towards a Disclosure Framework for the Notes, were not addressed in the IASB's principles of disclosure DP. EFRAG asks the IASB to consider (1) the boundaries of the financial statements; (2) "the implications of developments in technology on the disclosure problem and on the presentation of financial statements in general in greater depth;" and (3) expanding the tiers of disclosure requirements approach.

Comments on EFRAG's draft comment letter are requested by 11 September 2017. For more information, see the press release and the draft comment letter on the EFRAG website.

Please note that this final draft comment letter supersedes the earlier first draft comment letter published in May. It may amend some preliminary responses included herein and/or include additional questions to constituents.

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