Disclosure framework — FASB discusses interim disclosures and changes to certain decision questions

Published on: 10 Oct 2013

Yesterday, the FASB met to discuss certain aspects of its July 2012 discussion paper (DP), Invitation to Comment: Disclosure Framework.1 The Board discussed (1) developing its framework for interim reporting and disclosures and (2) proposed changes to the decision questions in the DP.

Disclosure Framework for Interim Reporting and Disclosures

The Board tentatively decided to add a section to its decision process related to interim disclosure requirements. The section would align with requirements in FASB Accounting Standards Topic 270, Interim Reporting, and SEC Regulation S-X, Rule 10-01, “Interim Financial Statements.” The Board decided that the section would include the following decision questions related to interim disclosures, as specified in the meeting handout:

  • “Is the line item (or items) included in the interim financial statements recognized, measured, or presented differently than the same or comparable line item (or items) in the annual financial statements? If so, are the difference(s) and related implications of the difference(s) apparent from the interim financial report?”
  • “Is there information that would be necessary for the relationship between the interim financial report and the annual results (of which the interim is an integral part) to be apparent?”

The Board also agreed that disclosure requirements for interim financial statements should permit a higher degree of aggregation than those for annual financial statements.

Changes to Decision Questions

The FASB staff also proposed several changes to the DP’s decision questions. The staff identified the changes by comparing disclosures under (1) the private-company decision-making framework, (2) current FASB projects, and (3) the FASB Accounting Standards Codification to those indicated in the DP. Accordingly, the FASB tentatively decided to do the following:

  • Add decision questions related to:
    • Subsequent events and the correction of errors.
    • Past transactions and events or existing conditions that may give rise to the recognition of an obligation in the future.
    • Clarification in line items that could affect future cash flows that may not be readily understandable from the financial statements.
  • Modify the disclosures indicated in Question L152 to address significant changes in estimates.
  • Modify Question L2 and the indicated disclosures to include considerations of an entity’s own equity instruments.

Next Steps

The Board plans to meet again later this month. After working through any remaining issues, the staff expects to begin drafting a chapter to be added to the FASB Concepts Statements on the Board’s decision-making process (which will be issued in the form of an exposure draft).


1    As part of the FASB’s project to develop a framework to make financial statement disclosures “more effective, coordinated, and less redundant,” the DP identifies aspects of the notes to the financial statements that need improvement and explores possible ways to improve them. If implemented, some of the proposals in the DP could significantly change the Board’s process for creating disclosure requirements in future standards and could potentially alter those in existing standards. See Deloitte’s July 17, 2012, Heads Up for additional information.

2    For a list of these questions, see chapter 2 of the DP.

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