THE IASB is amending the way financial statements are presented under IFRS as part of its review into the disclosures requirements in existing international reporting rules.
As part of its 2013 disclosure initiative, a package of projects aimed at improving the disclosure of financial information, the global standard setter is consulting on changes to IAS 1, the accounting standard that governs the presentation of financial statements.
The exposure draft proposes a series of narrow-focus amendments to IAS 1, which include clarifying materiality requirements by including an emphasis on the potentially detrimental effect of overwhelming useful information with immaterial information.
It will also clarify that specific line items in the statement(s) of profit or loss and other comprehensive income and the statement of financial position can be disaggregated; clarify that entities have flexibility as to the order in which they present the notes and remove potentially unhelpful guidance in IAS 1 for identifying a significant accounting policy.
Requirements will also be added for how an entity should present subtotals in the statement(s) of profit or loss and other comprehensive income and the statement of financial position.
Hans Hoogervorst, chairman of the IASB commented:”The Disclosure Initiative is focused on ensuring that financial reports are instruments of communication and not simply compliance documents. These proposals form a small part of our efforts to encourage preparers, auditors and regulators away from a ticking-the-box mentality towards disclosures.
“These proposals are designed to help change behaviour, by emphasising the importance of understandability, comparability and clarity in presenting financial reports.
The Exposure Draft can be downloaded here.