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Disclosure initiative — IAS 1 amendments

Background

This project is part of the IASB's overall disclosure initiative.

The IASB formally added a short-term initiative on disclosure to its work programme in December 2012 as part of its response to the Agenda consultation 2011. The objective of the initiative was to explore opportunities to see how those applying IFRS can improve and simplify disclosures within existing disclosure requirements.

In implementing this initiative, the IASB undertook a constituent survey on disclosure and held a disclosure forum designed to bring together securities regulators, auditors, investors and preparers.

The IASB subsequently issued Feedback Statement Discussion Forum – Financial Reporting Disclosure on 28 May 2013, which outlined the IASB's intention to consider a number of further initiatives, including a narrow scope project on IAS 1 Presentation of Financial Statements to address perceived impediments to preparers exercising their judgement in presenting their financial reports.  Additional narrow scope amendments to IAS 1 may result from the IASB's project on materiality and its research project on a disclosure framework (financial statement presentation).

This project will consider proposals such as:

  • adding an explanation in IAS 1 similar to more recent standards explaining that too much detail can obscure useful information, i.e. why materiality should "filter out entity-specific information that is not relevant to the users of the financial statements of a particular entity"
  • clarifying that materiality applies to the whole financial statements and that information which is not material need not be presented in the primary financial statements or disclosed in the notes
  • clarifying that some disclosures specified in standards are simply not important enough to justify separate disclosure for a particular entity
  • making it clear that preparers should exercise judgement in presenting their financial reports
  • remove the perception of a 'normal order of presentation' of financial statements, making it easier for entities to provide more contextual and holistic information
  • reducing restrictions on how accounting policies should be presented, allowing important accounting policies to be given greater prominence in financial reports
  • adding additional explanations with examples of how IAS 1 requirements are designed to shape financial statements instead of specifying precise terms that must be used, including whether subtotals of IFRS numbers such as earnings before interest and tax (EBIT) and earnings before interest, tax, depreciation and amortisation (EBITDA) should be acknowledged in IAS 1
  • adding a requirement that entities disclose and explain their net debt reconciliation.

 

Current status of the project

This project has been completed. The IASB issued Disclosure Initiative (Amendments to IAS 1) on 18 December 2014.

 

Project milestones

DateDevelopmentComments
28 May 2013 Feedback Statement Discussion Forum – Financial Reporting Disclosure published Three key actions to be considered by the IASB:
  • Narrow scope amendments to IAS 1
  • A project to develop application guidance or educational material on materiality
  • Revised research project on financial statement presentation
25 March 2014 ED/2014/1 Disclosure Initiative (Proposed amendments to IAS 1) published
Comments requested by 23 July 2014
18 December 2014 Disclosure Initiative (Amendments to IAS 1) published
Effective for annual periods beginning on or after 1 January 2016, early adoption permitted

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