By Jason Bramwell
In an effort to clarify the facts about the Financial Accounting Standards Board (FASB) Disclosure Framework project, the standard-setting organization has created a questions-and-answers fact sheet about the initiative.
For its Disclosure Framework project, the FASB is working on ways to improve the effectiveness of disclosures in notes to financial statements for public and private companies as well as not-for-profit organizations.
"The framework is designed to lead to disclosures that clearly communicate the information that is most important to the users of financial statements", the FASB stated in the fact sheet. "It is intended to promote consistent decisions by the FASB about disclosure requirements and guide reporting organizations when making disclosure decisions."
The fact sheet, which was created by FASB staff in response to stakeholders' questions, provides additional information on how the project comprises two components: the board's decision-making process and the entity's decision-making process.
The fact sheet includes answers to the following nine frequently asked questions about the disclosure initiative:
- What is the board's decision process?
- Is the primary goal of the Disclosure Framework project to reduce the volume of the notes to financial statements?
- Don't existing disclosure requirements lead to unnecessary volume?
- Will the board's decision process require preparers to disclose predictions and forecasts of future cash flows?
- Will disclosure overlap between US Generally Accepted Accounting Principles (GAAP), US Securities and Exchange Commission (SEC) rules, and other regulatory requirements be eliminated?
- Will the board's decision process address interim reporting?
- How are investor concerns being taken into account in the project?
- How does the Disclosure Framework project relate to private companies?
- What types of organizations have registered for the field study?
The FASB is in the process of conducting a field study to test public, private, and not-for-profit organizations' abilities to exercise discretion over which disclosures they provide in notes to financial statements, the FASB stated on the Disclosure Framework project page on its website, which was updated October 10.