Disclosure Framework

Why Did the FASB Decide to Add a Disclosure Framework Project to Its Agenda?

In 2009, the FASB added the disclosure framework project to its technical agenda with the goal of establishing an overarching framework intended to make financial statement disclosures more effective 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 Securities and Exchange Commission’s (SEC) Advisory Committee on Improvements to Financial Reporting (Recommendations 1.2 and 1.3).

Beginning with the Invitation to Comment, Disclosure Framework, in 2012, the FASB has issued eight due process documents to obtain feedback on the many phases of this project.  Additionally, there has been a public roundtable in Norwalk as well as three forums held on both coasts. Furthermore, we have cooperated with other standards such as EFRAG in some our research. Continue to Disclosure Framework Project Page

What Is the Objective of the Disclosure Framework Project?

The objective 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 the users of financial statements.

This project has approached improving disclosures by creating a framework that can be used by the Board when setting disclosure requirements, evaluating certain topics using that framework, and clarifying materiality’s role in a reporting organization’s assessments.
  Continue to Disclosure Framework Project Page

What are the Recent Developments?

The different approaches to improving disclosures have resulted in redeliberations being completed on the following areas:
  • A new chapter in the FASB’s conceptual framework on disclosures. The chapter explains what information should be considered for inclusion in notes by describing the purpose of notes and general limitations, and then more directly addressing the nature of the appropriate content. An item that may be considered for disclosure by the Board because of the decision process will not automatically become a required disclosure. The Board and its staff will continue to evaluate, for example, the costs and benefits associated with each potential disclosure.
  • An update to an existing chapter of the conceptual framework for its definition of Materiality. The amendment aligns the FASB’s definition of materiality with other definitions in the financial reporting system
  • An update to Fair Value Measurement disclosure requirements.
  • An update to Defined Benefit Plan disclosure requirements.
Continue to Board's Decision Process Project Page

What Are the Next Steps?

The Board is going to continue to use the framework to look back at the current disclosure requirements related to income taxes and inventory, as well as for any current or future project in which disclosure requirements may be set or amended.

The Board is also concluding deliberations on disclosures related to government assistance.  That project was also influenced by the Board’s work on its conceptual framework chapter on disclosure. 

The framework chapter also contains concepts related to disclosure requirements for interim financial statements, which is another area that the Board hopes to revisit in the near future.
  Continue to Disclosure Framework Project Page