“The conceptual framework is the foundation for resolving accounting and reporting questions,” FASB Chairman Russell Golden said in a written statement. “These proposals are intended to provide direction, structure, and a basis for consistent board conclusions when making standard-setting decisions related to presentation.”
The exposure draft, Concepts Statement 8—Conceptual Framework for Financial Reporting: Chapter 7: Presentation, first describes the information provided by the financial statements and then addresses how the display of information in the financial statements best meets the objective of financial reporting.
According to the FASB, the proposal is designed to provide a foundation for future standards that enhance financial statement users’ abilities to assess prospects for future cash flows by addressing how to:
Group individual recognized items into line items and subtotals.
Clarify the relationships among assets, liabilities, and equity, and the effects of related changes of those assets and liabilities on comprehensive income and cash flows.
Once appropriate factors on how items should be displayed in financial statements are identified, the FASB will prioritize those factors based on the item being evaluated for presentation purposes, according to a summary of the proposal.
“The priority of the factors would be determined in the context of best meeting the objective of financial reporting,” the summary states. “The proposal does not address how the board should accomplish prioritizing the factors identified. The board believes this is best established in the context of individual standard-setting projects.”
Comments on the proposal are due by Nov. 9. Instructions on how to submit comments to the FASB are included in the exposure draft.