Project Update

Disclosure Framework—Board's Decision Process

Last updated on July 26, 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
*Next Steps
*Board/Other Public Meeting Dates
Public Outreach
Resource Group and Other Outreach
Background Information
*Contact Information

Project Objective and Overview

The 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 Board’s Decision Process is intended to aid the FASB in identifying disclosures to be considered when setting disclosure requirements for individual accounting standards and evaluating existing disclosures requirement. A disclosure that may be considered by the FASB will not automatically be required. This process involves the FASB and its staff continuing to evaluate the costs, negative consequences, and benefits associated with each potential disclosure at the standard level.

Currently, four disclosure areas are being evaluated as part of the Disclosure Framework project. Each review will include (1) evaluation of existing disclosure requirements within the Topic after applying the concepts in the Board’s Decision Process and (2) promotion of the appropriate use of discretion by entities specifically within the Topic. The Board’s decision process and the entity’s decision process are being used in conjunction to modify the disclosure sections in the following Topics:
  1. Fair Value Measurement (Section 820-10-50)  
  2. Defined Benefit Plans (Section 715-20-50)
  3. Income Taxes (Section 740-10-50)
  4. Inventory (Section 330-10-50)
Additionally, disclosure requirements for Interim Reporting are being evaluated for modifications.

The FASB staff has developed a “Q&A: FASB’s Disclosure Framework Project” fact sheet, which can be viewed here.

Due Process Documents

On March 4, 2014, the FASB issued the proposed Concepts Statement, Conceptual Framework for Financial Reporting—Chapter 8 Notes to Financial Statements. The due date for comment letters was July 14, 2014.

On July 12, 2012, the Board issued an Invitation to Comment, Disclosure Framework. The original due date for comment letters was set for November 16, 2012 but due to Hurricane Sandy the comment period was extended two weeks to November 30, 2012.

*Decisions Reached at Last Meeting (July 19, 2017)

The Board discussed issues related to the proposed FASB Concepts Statement, Conceptual Framework for Financial Reporting—Chapter 8: Notes to Financial Statements.

The Board decided the following:
  1. To retain not-for-profit entities and private companies in the scope of the Concepts Statement on notes to financial statements.
  2. To include a discussion about the potential negative consequences of disclosures in the Concepts Statement.
  3. To reaffirm that the Concepts Statement would have the Board consider disclosure of changes in line items that are not easily understood because the causes of changes in those line items are numerous or because the line items are subject to nonroutine changes.
  4. To reaffirm that the Concepts Statement would have the Board consider disclosure of alternative measures that are clearly useful in assessing prospects for future cash flows.
The Board decided not to establish disclosure objectives without providing specific requirements or guidance on how to meet those objectives.

*Tentative Board Decisions Reached to Date (as of July 19, 2017)

Tentative Board Decisions to Date

*Next Steps

The Board directed the staff to perform research on:
  1. How the Concepts Statement would change if employee benefit plans were included within its scope
  2. Other examples of disclosures that provide information about how a line item is affected by general economic conditions, market factors, or entity-specific or sector-specific factors.
The staff plans to discuss the following topics at future Board meetings:
  1. The three types of future-oriented information that could be appropriate for the notes to financial statements
  2. The cost-constraint discussion in the proposed Concepts Statement
  3. Whether other concepts should be included in the Concepts Statement
  4. Information about past events and current conditions and circumstances that are not recognized
  5. Information about the reporting entity
  6. Interim reporting concepts.

*Board/Other Public Meeting Dates

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.

*July 19, 2017 Board Meeting—Materiality
February 18, 2015 Board Meeting—Board’s Decision Process
November 19, 2014 Board Meeting—Materiality
September 10, 2014 Board Meeting—Comment Letter Summary and Possible Next Steps
November 6, 2013 Board Meeting—Interim Reporting, Scope of the Board’s Decision Process, and Permission to Ballot
October 9, 2013 Board Meeting—Additions and other Changes to the Board’s Decision Process and Interim Reporting
August 7, 2013 Board Meeting—The Needs of Providers of Resources to Not-for-Profit Entities and Line Items Decision Questions
July 25, 2013 Board Meeting—Role of the Notes, and SEC Disclosure Overlap within the Financial Report, and Other Regulatory Disclosure Overlap outside the Financial Report
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 MeetingAgenda Announcement

Public Outreach

On 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

In 2012, the FASB, in conjunction with the Center for Audit Quality (CAQ), held two forums on disclosure effectiveness designed to encourage dialogue among a wide range of financial reporting stakeholders on improving the effectiveness of disclosures in notes to financial statements and other parts of the financial reporting package. The forums were held at Columbia University’s Center for Excellence in Accounting and Security Analysis in New York City on October 4, and at the Stanford University Graduate School of Business in Stanford, California, on October 8.

Resource Group

The Board established a resource group to help identify key issues with existing disclosures and evaluate proposed solutions. The membership of that group includes academics, analysts, auditors, preparers, and regulators. The staff consults informally with members of the resource group as needed. The group met with Board members and staff on October 28, 2011. Future meetings will be scheduled if necessary.

Background Information

On 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 2012 Invitation to Comment and a similar discussion paper issued by EFRAG.

*Contact Information

Nick Cappiello
Project Manager

Jaime Dordik
Assistant Project Manager

Haoran Jiang
Postgraduate Technical Assistant

Kelly Coyne
Postgraduate Technical Assistant