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FASB Staff Draft on Financial Statement Presentation

Published on: 01 Jul 2010

Today, the FASB posted on its Web site a “staff draft” of an exposure draft (ED) on financial statement presentation that will apply to most entities[1] (the IASB posted a similar draft on its Web site). The staff draft reflects tentative decisions made by the FASB through April 2010; however, the guidance is subject to change before the Board issues an ED for public comment. In publishing this draft, the Board decided to engage in additional outreach activities focused primarily on “(1) the perceived benefits and costs of the proposals and (2) the implications of the proposals for financial reporting by financial services entities.” Although there is no formal request for comments on the draft, input from interested parties is welcome. The FASB still expects to publish an ED for public comment in early 2011.

In this project, the boards are taking a "fresh look" at the manner in which financial information is presented in an entity’s statement of financial position, statement of comprehensive income, and statement of cash flows. The revised financial statement format is expected to be more cohesive and split between business (i.e., operating and investing) and financing activities. This format would largely resemble the current presentation in the statement of cash flows. The intent of requiring a single financial statement presentation is to enhance the usefulness of financial information and increase the comparability and consistency of financial statements within and across entities.

For more information on the project, see Deloitte’s Accounting Roundup — Special Edition, The Tidal (Coming In) Waves of Accounting and Financial Reporting Changes (updated in June 2010).

[1] The proposed standard would not apply to the structure and content of general-purpose financial statements prepared by a not-for-profit entity or benefit plan within the scope of FASB Accounting Standard Codification Topics 960, Plan Accounting — Defined Benefit Pension Plans; 962, Plan Accounting — Defined Contribution Pension Plans; and 965, Plan Accounting — Health and Welfare Benefit Plans. Further, certain provisions would not apply to nonpublic entities, certain investment companies, common trust funds, variable annuity accounts, or similar funds that meet specific requirements.

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