24 January 2013

IASB: Joint effort needed to tackle disclosure problem

The IASB released highlights of a survey conducted recently on financial information disclosures, ahead of its public discussion forum on Disclosures in Financial Reporting. Respondents to the survey identified various factors that contribute to the disclosure problem.

Highlights of the survey include:

• over 80 per cent of respondents agreed that improvements could be made to the way financial information is disclosed. Half of those respondents felt that such improvements were required across all parts of the annual report, and not just the financial statements;
• most preparers of financial statements identified the primary problem as disclosure requirements being too extensive with not enough being done to exclude immaterial information—which has been referred to as disclosure overload;
• many users of financial statements felt that preparers could do more to improve the communication of relevant information within the financial statements, rather than leaving users to sift through large amounts of data; and
• a range of views on the underlying causes of the problem was identified. Some respondents felt that more could be done to improve the way in which accounting standards are set out. Others expressed concerns that preparers, auditors and regulators are approaching financial reporting as an exercise in compliance rather than as a means of communication.

Commenting on the results of the survey, Hans Hoogervorst, Chairman of the IASB said: "We very much appreciate the detailed and high-quality feedback provided by respondents to this survey. That feedback indicated a need for standard-setters, auditors, preparers, regulators and investors to work together in order to deliver much-needed improvements to all disclosures, not just those contained within the financial statements. Our discussion forum on disclosures next week is the first step on that journey.”

Press release

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