Financial Statement Presentation—Joint Project of the FASB and IASB
Last updated on May 3, 2011. 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 *)
This project update summarizes the project activities and decisions of the IASB and FASB (the boards). It was prepared by the staff and is for the information and convenience of the boards’ constituents. All decisions of the boards are tentative, may change at future board meetings, and do not change current accounting and reporting requirements. Decisions of the boards become final only after extensive due process.Outreach Activities on July Staff Draft
Due Process Documents
*Decisions Reached at Last Meeting
*Summary of Decisions Reached to Date
Board Meeting Minutes and Public Meeting Information
Field Tests and Research Study
Background Information and Project Phases
Outreach Activities on July Staff Draft
- Listen to a brief podcast that explains why the Staff Draft was posted, provides a high level description of the proposals and changes from the Discussion Paper, and discusses planned outreach activities.
- View a webinar recorded by IASB Board Member Stephen Cooper, which provides a technical overview of the proposals in the Staff Draft.
- View a webinar recorded by IASB Board Member Patricia McConnell and FASB Board Member Marc Siegel discussing the tentative decisions on the statement of cash flows included in the Staff Draft.
- Click here for a summary of the activities the staff is engaging in as part of the extended outreach on financial statement presentation.
The purpose of this joint project is to establish a standard that will guide the organization and presentation of information in the financial statements. The results of this project will directly affect how the management of an entity communicates financial statement information to users of financial statements, such as present and potential equity investors, lenders, and other creditors. The boards’ goal is to improve the usefulness of the information provided in an entity’s financial statements to help users make decisions in their capacity as capital providers.
In their Phase B discussions, the Boards developed two core principles for financial statement presentation based on the objectives of financial reporting and the input the boards received from users of financial statements and from members of their advisory groups. Those proposed principles state that information should be presented in the financial statements in a manner that:
- Disaggregates information so that it is useful in predicting an entity’s future cash flows. Disaggregation means separating resources by the activity in which they are used and by their economic characteristics.
- Portrays a cohesive financial picture of an entity’s activities. A cohesive financial picture means that the relationship between items across financial statements is clear and that an entity’s financial statements complement each other as much as possible.
Due Process Documents
The staff of the FASB and IASB engaged in a focused and targeted outreach program on the boards’ joint Financial Statement Presentation (FSP) Project before finalizing and publishing an exposure draft.
To facilitate their outreach efforts, the boards decided that a draft of the proposed standards would be an effective way of communicating their tentative decisions reached to date (which is referred to as a “staff draft”). The draft reflects the cumulative tentative decisions made by the boards concluding with their joint meeting in April 2010. However, work on the project is continuing, and the proposals are subject to change. The staff draft has not been approved by either the FASB or the IASB.
Introduction to and summary of the July 2010 staff draft
FASB staff draft
IASB staff draft
Note: For ease of understanding the differences in the boards’ tentative decisions, the IASB staff draft includes paragraphs that would be proposed by the FASB but not the IASB and the FASB staff draft includes paragraphs that would be proposed by the IASB but not the FASB.
Discussion Paper (Phase B only)
On October 16, 2008, both boards published for public comment a discussion paper, Preliminary Views on Financial Statement Presentation. The FASB discussion paper and the IASB discussion paper are the same except for differences in style/format. The comment period ended on April 14, 2009.
Information Related to the Discussion Paper
The boards completed their deliberations on Phase A in December 2005. On March 16, 2006, the IASB published its Phase A exposure draft, Proposed Amendments to IAS 1 Presentation of Financial Statements: A Revised Presentation. The FASB decided to consider phases A and B issues together and, therefore, did not publish an exposure draft on phase A. After considering the responses to its exposure draft, the IASB issued a revised version of IAS 1 in September 2007. The revisions to IAS 1 affected the presentation of changes in equity and the presentation of comprehensive income, bringing IAS 1 largely into line with FASB Statement No. 130, Reporting Comprehensive Income (Statement 130). The FASB’s tentative decisions on Phase A issues are included in the FASB July 2010 staff draft.
After completing and carefully considering the results of the outreach activities, the Boards will deliberate and make changes as appropriate to their tentative decisions as reflected in the staff draft. At their October 2010 joint meeting, the Boards acknowledged that they do not have the capacity currently to devote the time necessary to consider the information learned during outreach activities and modify their tentative decisions. Consequently, the Boards decided to not issue an Exposure Draft in the first quarter 2011 as originally planned.
The staff will present the results of their outreach activities with the Boards at their March 2011 meeting. The Boards will return to this project when they have the requisite capacity. This is expected to be after June 2011.
*Decisions Reached at Last Meeting
The staff presented the results of its outreach activities related to the July 2010 staff draft of an Exposure Draft on financial statement presentation. The Boards reiterated their October 2010 decision that they will return to this project when they have the requisite capacity.
No decisions were made regarding technical aspects of the project or the timing of future Board meetings.
Summary of Decisions Reached to Date (as of April 22, 2010)
Field Tests and Research Study on October 2008 Discussion Paper
During the 6-month comment period on the discussion paper, 30 entities participated in a field test. As part of the field test, participant companies recast two years of financial statements using the principles and application guidance in the discussion paper and completed a survey about that recasting exercise. A summary of the survey responses is provided as part of the July 2009 joint meeting papers.
At board meetings in September 2009, the boards discussed the analyst portion of the field test and the results of an experimental study on the proposed presentation model that was conducted by the Financial Accounting Standards Research Initiative (FASRI).
To further their research, the boards and staff have been seeking input informally from the following groups on a regular basis:
The Joint International Group (JIG) on financial statement presentation was formed in 2005 to help the boards and staffs identify issues to be considered in this project and develop proposed solutions. The JIG consists of senior professionals with extensive experience in and responsibility for the preparation, analysis, audit, and regulation of financial statements. The JIG does not include members from the financial institution preparer or user community. JIG Members
The boards formed a Financial Institution Advisory Group (FIAG) in September 2006 to help them address presentation issues from the perspective of those who analyze and prepare financial institution financial statements. FIAG MembersBoard members and staff met with members of both the JIG and the FIAG on December 6, 2010 in Norwalk and London (by video).
View meeting materials and minutes for past JIG and FIAG meetings.
Background Information and Project Phases
In 2001, the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) added to their respective agendas a project on reporting financial performance and conducted those projects independently of one another. In 2004, the boards agreed that they should conduct a project of this nature jointly to promote the convergence of accounting standards used internationally. The FASB and IASB are sharing staff resources and research for this joint project. The joint project team consists of staff from the FASB, the IASB, and the ASBJ (Accounting Standards Board of Japan).
In agreeing to pursue their similar projects jointly, the boards agreed to take a fresh look at the presentation of information in financial statements. The joint project scope goes beyond presentation and display of items of income and expense; it addresses presentation and display on the face of the financial statements that constitute a complete set of financial statements. In April 2004, the boards decided to approach the project in three phases:
- Phase A would address the statements that constitute a complete set of financial statements and the periods for which they are required to be presented. [See above]
- Phase B would address more fundamental issues relating to presentation and display of information in the financial statements, including aggregating and disaggregating information in each primary financial statement, defining totals and subtotals, and reconsidering the use of a direct or an indirect method of presenting operating cash flows. [In process]
- Phase C would address the presentation and display of interim financial information in U.S. generally accepted accounting principles (GAAP). The IASB also may reconsider the requirements in IAS 34, Interim Financial Reporting. [Not yet started]
Paper explaining the history of the project (JIG meeting agenda paper, January 2005)
Summary of User Interviews, FASB Staff Paper, February 2002
FASB Proposal for a Project on Reporting Financial Performance (August 17, 2001)
FASB Project Manager
IASB Technical Manager