Project Updates

Financial Statement Presentation—Joint Project of the IASB and FASB

Last Updated: April 30, 2008 (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.

Project Objective
*Project Plan
Due Process Documents
Decisions Reached at the Last Meeting
*Summary of Decisions Reached to Date
*Next Steps
Board Meeting Minutes and Public Meeting Dates
Related FASB Articles
Background Information
Contact Information

Project Objective

The objective of this joint FASB/IASB project on financial statement presentation is to establish a common, high-quality standard for presentation of information in the individual financial statements (and among the financial statements) that will improve the ability of investors, creditors, and other financial statement users to:

  1. Understand an entity’s present and past financial position

  2. Understand the past operating, financing, and other activities that caused an entity’s financial position to change and the components of those changes

  3. Use that financial statement information (along with information from other sources) to assess the amounts, timing, and uncertainty of an entity’s future cash flows.

The standard will address the presentation and display of financial statement information, including the classification and display of line items and the aggregation of line items into subtotals and totals.

*Project Plan

The FASB and IASB are sharing staff resources and research for this joint project and are working to coordinate the issuance of a public discussion document. The joint project team consists of staff from the ASBJ (Accounting Standards Board of Japan), the FASB, and the IASB. The project is being conducted in phases, as described below:

  • Phase A
    Phase A addressed what constitutes a complete set of financial statements and the requirements for presenting comparative financial information. The IASB and the FASB completed deliberations on Phase A in December 2005.

  • Phase B
    Phase B addresses the more fundamental issues for presentation of information on the faces of financial statements. Phase B topics include:

    1. Developing principles for aggregating and disaggregating information in each financial statement

    2. Defining the totals and subtotals to be reported in each financial statement (this might include categories such as business and financing)

    3. Reconsidering FASB Statement No. 95, Statement of Cash Flows, and IAS 7 Statement of Cash Flows, including whether to require the use of the direct or indirect method.

    *The initial output for Phase B is a discussion document (similar to a Preliminary Views or a Discussion Paper) that the Boards expect to publish in the third quarter of 2008.

  • Phase C
    Phase C will address the presentation and display of interim financial information in U.S. GAAP. The IASB may reconsider the requirements in IAS 34, Interim Financial Reporting.

    Phase C topics include:

    1. Which, if any, financial statements should be required in an interim financial report.

    2. Whether entities should be allowed to present the financial statements in an interim financial report in a condensed format; if so, whether the Boards should provide guidance on how to condense the information.

    3. What comparative periods, if any, should be required or allowed in interim financial reports, and when, if ever, should 12 month-to-date financial statements be required or allowed in interim financial reports.

    4. Whether guidance for nonpublic companies should differ from guidance for public companies.

    The Boards will begin work on the Phase C topics during the latter stages of Phase B.

Due Process Documents

Phase A

On March 16, 2006, the IASB published its Phase A Exposure Draft, Proposed Amendments to IAS 1 Presentation of Financial Statements: A Revised Presentation.

Phase A Exposure Draft, Proposed Amendments to IAS 1 Presentation of Financial Statements: A Revised Presentation

Link to Comment Letters on IASB website

On September 6, 2007, the IASB published the revised version of IAS 1 Presentation of Financial Statements, which brings IAS 1 largely into line with FASB Statement No. 130, Reporting Comprehensive Income.

IAS 1, Presentation of Financial Statements

The FASB decided that it would not publish a separate Exposure Draft on Phase A of the project. Rather, it will expose its Phase A decisions along with its Phase B decisions.

Decisions Reached at the Last Meeting

March 11, 2008 IASB meeting—IASB Update

March 12, 2008 FASB meeting—Action Alert

*Summary of Decisions Reached to Date (March 31, 2008)

Although the Boards coordinate the timing of their deliberations of the issues in the joint project, they deliberate and vote on each issue individually. As a result, at any given time, one Board may have reached a tentative conclusion on a given issue, while the other Board has not yet deliberated on it. Similarly, the Boards could reach different tentative conclusions on certain issues. Any differences in views or timing of discussion are noted below.

Scope and scope exceptions

  1. The standard will apply to all business entities (public and nonpublic) but will not apply to nonbusiness entities (not-for-profit organizations or defined benefit plans). The Boards are attempting to develop a principles-based standard that will apply equally to all business entities; however, they will consider whether the standard should include different presentation provisions for a limited scope of entities (for example, financial institutions).

  2. The project will address the organization and presentation of financial information on the face of the financial statements; it will not address recognition or measurement guidance provided in other standards for individual assets, liabilities, or transactions.

  3. The project will address all the financial statements that constitute a complete set of financial statements. Phase C of the project will address interim financial information.

  4. The project will address the necessity for totals and subtotals in the financial statements, including the net income/profit or loss subtotal. The project will assess whether to change the mechanism of recycling used today.

  5. The project will not include a comprehensive review of the notes to the financial statements. However, since changes will be made to the face of financial statements, the Boards may need to amend existing disclosure requirements. In addition, if the Boards are unable to achieve the project objective by making changes to the face of financial statements, they may choose to develop new disclosure requirements.

  6. The project will not address the following:

    1. Management discussion and analysis or management commentary.

    2. Pro forma measures.

    3. A comprehensive review of segment reporting requirements. However, since the project will make changes to the financial statements, it may result in amendments to the current segment reporting requirements. (Note: The IASB on November 30, 2006, issued IFRS 8, Operating Segments, as part of a separate short-term convergence project.)

    4. Financial ratios (except earnings per share [EPS] and other per-share amounts).

    5. Forecasts of information.

    6. Nonfinancial ratios or other nonfinancial information.

    7. Financial statements for specific industries (except for considering how the decisions in the project may affect the financial statements of financial institutions).

Phase A: Summary of Decisions as of September 30, 2007

*Phase B: Summary of Preliminary Views as of March 31, 2008

*Next Steps

The staff is currently drafting the initial discussion document based on the Boards’ preliminary views to date. It expects that drafting to continue into the second quarter of 2008. The staff plans to provide the Boards with a draft of the document in May 2008. The Boards will address any remaining issues once they have reviewed that draft. The Boards expect to publish the discussion document in the third quarter of 2008.

Board/Other Public Meeting Dates

Related FASB Articles

Background Information

In April 2004, to further the goal of promoting convergence of the accounting standards used internationally, the FASB and IASB decided to combine their respective projects on the reporting and classification of items of revenue, expense, gains, and losses. 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 has an expanded scope 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.

Advisory Groups

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 Members

    The Boards met with members of the JIG in January and June, 2005 and September 2006. [Meeting Materials]

    A meeting with members of both the JIG and the FIAG was held September 14, 2007, at the FASB offices in Norwalk, Connecticut. View a summary of that meeting and meeting materials.

    History of the Project

Contact Information

Kim Petrone
FASB Senior Project Manager
krpetrone@fasb.org

Denise Gomez
IASB Project Manager
dgomez@iasb.org



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