25 Mar IASB – proposes a new approach that opens the way to better communication in the Notes in Financial Statements
March 25, 2021
The notes found in many financial statements sometimes include too little relevant information, too much irrelevant information, and information disclosed ineffectively. Stakeholders say this typically occurs when the requirements in IFRS standards are treated just like a checklist without applying any effective judgment on the content. Responding to stakeholder demand for action on this matter, IASB has now set out a new approach to further developing the disclosure requirements in the IFRS standards.
The new approach is written as draft guidance for use by the IASB when developing disclosure requirements in individual standards. In applying the guidance, IASB aims to enhance investor engagement to ensure they have an in-depth understanding of investors’ information needs and include those. It will give greater prominence to the objective of disclosure requirements, requiring companies to apply judgment and provide information to meet those investor needs. It will minimize the requirements to disclose particular items of information, and instead, it will help companies to focus on disclosing relevant material information only. IASB has tested this new approach using two IFRS Standards, IFRS 13 Fair Value Measurement and IAS 19 Employee Benefits and proposes to amend both.
IASB is seeking stakeholder feedback on whether the proposed new approach to developing disclosure requirements and proposed amendments to IFRS 13 and IAS 19 would help companies and others improve the usefulness of the information disclosed.
IASB is asking for stakeholder comments by October 21, 2021.
For more information, visit www.ifrs.org