Staff members at the Financial Accounting Standards Board and the International Accounting Standards Board have published a preview of how a new standard on financial statement presentation might read.

The two boards have reached some tentative decisions that are outlined in a draft standard and published to get folks thinking further about the direction in which the standard is moving. FASB and IASB said in a recent update on their efforts to converge U.S. and international accounting rules that they would undertake some further outreach with stakeholders on the effort to reorganize financial statement presentation before publishing it as a formal exposure draft.

Staff members plan to seek input from users of financial statements to evaluate how the proposed system would benefit their analysis and their resource allocation or investment decisions. They also plan to query preparers on the effort and the cost that would be involved in adopting the new approach. Through more field work, field testing and experimental research, the staff will be looking for more information on the benefits and costs of the proposals, and especially their implications for financial services entities.

The FASB and IASB are rewriting the manner in which financial information is presented to make it more cohesive, easier to comprehend, and more comparable across different entities. The proposals would establish a common structure for each of the financial statements with required sections, categories, subcategories and related subtotals. It would result in the display of related information in the same sections, categories and subcategories across all statements.

The boards say the standards that will eventually be proposed will improve the comparability and understandability of information presented in financial statements by standardizing the way it is presented, particularly how it is classified and how it is aggregated or disaggregated. The boards plan to review the added information and publish an exposure draft in early 2011.

Topics