Quarterly IFRS news update
Welcome to IFRS News. This is your quarterly update on all things relating to International Financial Reporting Standards. We’ll bring you up to speed on topical issues, provide comment and points of view and give you a summary of any significant developments.
In this first edition of 2015, we’ll look at some of the issues companies will face during their reporting seasons; new Standards issued by the IASB; Exposure Drafts issued; IFRS-related news at Grant Thornton; and a general round-up of financial reporting developments.
You can find out about the implementation dates of newer Standards that are not yet mandatory towards the end of the document, as well as a list of IASB publications that are out for comment.
IASB takes steps to lighten the disclosure overload burden
The IASB has issued ‘Disclosure Initiative – Amendments to IAS 1 Presentation of Financial Statements’ (the Amendments).
The Amendments represent the first authoritative output from the IASB’s Disclosure Initiative project. The Disclosure Initiative itself is in part a reaction to the growing clamour over disclosure overload in financial statements. It consists of a number of projects, both short- and medium-term, and ongoing activities that explore how presentation and disclosure principles and requirements in existing Standards can be improved. The Amendments themselves are designed to further encourage companies to apply professional judgement in determining what information to disclose in their financial statements. Furthermore, the Amendments clarify that companies should use judgement in determining where and in what order information is presented in the financial disclosures.
- clarify the materiality requirements in IAS 1, including emphasis on the potentially detrimental effect of obscuring useful information with immaterial information
- clarify that IAS 1’s specified line items in the statement(s) of profit or loss and other comprehensive income and the statement of financial position can be disaggregated
- add requirements 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
- clarify that entities have flexibility as to the order in which they present the notes, but also emphasise that understandability and comparability should be considered by an entity when deciding that order
- remove potentially unhelpful guidance in IAS 1 for identifying a significant accounting policy.
Effective date and transition
The Amendments to IAS 1 should be applied for annual periods beginning
on or after 1 January 2016 with early application permitted.
Grant Thornton International Ltd comment
The size of financial statements has grown significantly in recent years as disclosures have been added in the quest for greater transparency. Unfortunately this has led to concerns that the increased size of the notes to the financial statements has created a major burden for preparers, while failing to serve their intended purpose which is to help users understand the numbers in the financial statements. We therefore fully support the Disclosure Initiative and its objectives. These Amendments will achieve limited, short-term improvements and are a good start to this larger initiative.</blockquote>