Disclosure Framework—Entity’s Decision Process
Last updated on November 10, 2017. Please refer to the Current Technical Plan for information about the expected release dates of exposure documents and final standards.
(Updated sections are indicated with an asterisk *)
The staff has prepared this summary of Board decisions for information purposes only. Those Board decisions are tentative and do not change current accounting. Official positions of the FASB are determined only after extensive due process and deliberations.
Project Objective and Overview
Due Process Documents
*Decisions Reached at Last Meeting
*Tentative Board Decisions Reached to Date
Board/Other Public Meeting Dates
Project Objective and OverviewThe objective and primary focus of the Disclosure Framework project is to improve the effectiveness of disclosures in notes to financial statements by clearly communicating the information that is most important to users of each entity’s financial statements. (Although reducing the volume of the notes to financial statements is not the primary focus, the Board hopes that a sharper focus on important information will result in reduced volume in most cases.)
The objective of improving effectiveness will require development of a framework that promotes consistent decisions about disclosure requirements by the Board and the appropriate exercise of discretion by reporting entities. To achieve this objective, the Disclosure Framework project comprises two components: the Board’s Decision Process and the Entity’s Decision Process.
The Entity’s Decision Process is intended to promote the use of discretion by reporting entities when evaluating the requirements as set forth by the Board.
Currently, four sets of disclosure requirements are being reviewed as part of the Disclosure Framework project. Each review will include (1) an evaluation of existing disclosure requirements within the Topic after applying the concepts in the Board’s decision process and (2) consideration of ways to promote the appropriate use of discretion specifically within the Topic. The Board’s decision process and the entity’s decision process are being used together to modify the disclosure Sections in the following Topics:
- Fair Value Measurement (Section 820-10-50)
- Defined Benefit Plans (Section 715-20-50)
- Income Taxes (Section 40-10-50)
- Inventory (Section 330-10-50)
The FASB staff has developed a “Q&A: FASB’s Disclosure Framework Project” fact sheet, which can be viewed here.
Field StudyThe FASB conducted a field study that tested the ability of public and private companies and not-for-profit organizations to exercise discretion over which disclosures they provide in notes to financial statements. The FASB staff presented the results of this field study and next steps based on the field study findings at the April 4, 2014 Board meeting.
Due Process DocumentsOn September 24, 2015, the Board issued a proposed Accounting Standards Update, Notes to Financial Statements (Topic 235): Assessing Whether Disclosures Are Material. The due date for comment letters was December 8, 2015.
- Download the proposed Update, Notes to Financial Statements (Topic 235): Assessing Whether Disclosures Are Material. The due date for comment letters was December 8, 2015.
- Read the comment letters on the proposed Update
- Read the comment letter summary on the proposed Update
- Read the press release on the proposed Update
- Read the FASB In Focus which summarizes the proposed Update
- Download the proposed FASB Concepts Statement, Conceptual Framework for Financial Reporting—Chapter 3: Qualitative Characteristics of Useful Financial Information. The due date for comment letters was December 8, 2015.
- Read the comment letters on the proposed amendments to the Conceptual Framework
- Read the comment letter summary on the proposed amendments to the Conceptual Framework
- Read the press release on the proposed amendments to the Conceptual Framework
- Read the FASB In Focus, which summarizes the proposed amendments to the Conceptual Framework
- Download the Invitation to Comment, Disclosure Framework
- Read the comment letters on the Invitation to Comment
- Read the comment letter summary on the Invitation to Comment
- Read the news release introducing the Invitation to Comment
- Read the FASB In Focus, which summarizes the Invitation to Comment
- Listen now or download the Disclosure Framework Project in CFA Institute Webinar, led by the FASB's Ron Lott
- Listen now or Download In Focus: The FASB Disclosure Framework Project Webcast
*Decisions Reached at the Last Meeting (November 10, 2017)The Board decided to:
- Amend the current definition of materiality in Chapter 3, Qualitative Characteristics of Useful Financial Information, of FASB Concepts Statement No. 8, Conceptual Framework for Financial Reporting, with language similar to that of the definition in FASB Concepts Statement No. 2, Qualitative Characteristics of Accounting Information (superseded).
- Remove the reference to materiality as a legal concept in Concepts Statement 8 and in Topic 235, Notes to Financial Statements.
*Tentative Board Decisions Reached to Date (as of November 10, 2017)Tentative Board Decisions Reached to Date
Next StepsThe staff will draft Chapter 3 and Chapter 8, Notes to Financial Statements, of Concepts Statement 8. Also, the Board will continue to redeliberate materiality in the context of the FASB Accounting Standards Codification®.
*Board/Other Public Meeting DatesOn December 1, 2014, the FASB held a forum to discuss financial disclosures at Pace University in New York City.
Read the media meeting recap from the forum discussion on financial disclosures
Download and listen to the audio replay of the forum
The Board meeting minutes are provided for the information and convenience of constituents who want to follow the Board’s deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions become final only after a formal written ballot to issue a final standard.
|*November 8, 2017||Board Meeting—Entity’s Decision Process|
|December 14, 2016||Board Meeting—Entity’s Decision Process|
|March 2, 2016||Board Meeting—Entity’s Decision Process|
|July 29, 2015||Board Meeting—Entity’s Decision Process|
|April 22, 2015||Board Meeting—Entity’s Decision Process|
|February 18, 2015||Board Meeting—Flexible Disclosure Requirements|
|May 28, 2014||Board Meeting—Interim Disclosures|
|April 4, 2014||Board Meeting—Field Study Results and Next Steps|
|June 19, 2013||Board Meeting—Forward-Looking Disclosure Information, Decision Questions, and Changes to the Technical Plan|
|February 13, 2013||Board Meeting—Comment Letter Summary and Analysis of Comments and Possible Next Steps|
|April 25, 2012||Board Meeting —Interim Disclosures and Cost Consequence|
|August 24, 2011||Board Meeting—Decision Process for Disclosures about Line Items|
|August 18, 2010||Board Meeting—Objectives, Principles, and Criteria for Use in Setting Standards for Required Disclosures of Financial Information|
July 8, 2009
Board Meeting—Agenda Announcement
Background InformationOn July 8, 2009, the FASB chairman announced (press release) the addition of a new agenda project aimed at establishing an overarching framework intended to make financial statement disclosures more effective, coordinated, and less redundant. The project was added in response to requests and recommendations received from several constituents, including the Investors Technical Advisory Committee (ITAC) and the U.S. Securities and Exchange Commission’s (SEC) Advisory Committee on Improvements to Financial Reporting (Recommendations 1.2 and 1.3).
The staffs of the Board and the European Financial Reporting Advisory Group (EFRAG) have cooperated in the development of the ideas discussed in the Invitation to Comment and a similar discussion paper issued by EFRAG.
Contact InformationNick Cappiello
Postgraduate Technical Assistant
Postgraduate Technical Assistant