| This summary of Accounting Standards Board (AcSB) projects has been prepared for
information purposes only. Decisions reported are tentative and reflect only the current status of
discussions on this project, which may change after further deliberations by the AcSB. Decisions to publish
Handbook material are final only after a formal ballot process. |
Status: Staff work in progress.
The AcSB has discussed the preliminary findings of staff research on certain of the
components of a conceptual framework for disclosure. Work continues on these and the remainder of the
components.
Background
Activities to Date
Next Steps
Contact Information
Background
Description of the Project
The project is intended to provide guidance to standard setters on determining disclosure requirements for
accounting standards. It should also be useful to financial statement preparers in determining how to
apply these requirements to their specific circumstances.
This project is being undertaken on behalf of the International Accounting Standards
Board (IASB). It is expected that it will lead to guidance on disclosure that will be included not only
in Canadian GAAP but also in international and US GAAP.
Reasons for the Project
The AcSB decided to undertake this project for the following reasons:
- Section 1000, Financial Statement Concepts, contains the conceptual framework
on which Canadian accounting standards are based. (This framework is generally consistent with that of the US
Financial Accounting Standards Board (FASB) and the IASB.) The framework provides only limited guidance
on presentation and note disclosure. Hence, the AcSB (like the other major standard setters) is without
a well-defined process for determining the disclosure requirements to be included in new standards. The
lack of adequate guidance in this area has resulted in inconsistencies in the type and extent of disclosure
requirements in various accounting standards, and differences in disclosures by preparers applying the same
standards to similar circumstances.
- There is general concern about existing disclosures in financial statements. Users are demanding more and
higher quality disclosure. At the same time, some express the view that the growth in disclosures,
together with poor presentation, often makes it hard to understand the disclosures currently provided.
For their part, preparers complain about disclosure overload and question whether a number of existing
disclosure requirements are useful to financial statement users.
Developing a framework that provides a more thorough conceptual underpinning for the
determination of presentation and disclosure requirements for new accounting standards, and assists preparers
in deciding on information to be disclosed in their financial statements, would help address these
issues.
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Key Components and Areas of Research
The key components of the disclosure framework (and thus the principal areas of research for the project) are
as follows:
- the information needs of users;
- the scope of information that should be required to be disclosed in financial statements (versus other
reporting vehicles such as the MD&A);
- understandability (information is most useful when it is communicated clearly and effectively);
- the application of the other qualitative characteristics of financial statement information to
disclosure; and
- constraints on the provision of information, such as cost and competitive harm.
Activities to Date
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In October 2003, at the joint meeting of the AcSB, International Accounting Standards
Board (IASB) and US Financial Accounting Standards Board (FASB) in Toronto, the AcSB presented a preliminary
paper addressing the need for a disclosure framework. In April 2004, the IASB and FASB agreed with the
objective of moving toward a single conceptual framework (a component of which would address disclosure) and
that the AcSB’s Disclosure Framework Project would feed into the IASB/FASB conceptual framework
project.
To date, AcSB staff has performed research on the information needs of users, the scope
of financial statement information, and constraints on disclosure. Preliminary findings in these areas
have been discussed with the AcSB and provided to representatives of other national standard-setting bodies
and certain stakeholder groups for their input.
Next Steps
Work on the remaining components is ongoing. To ensure consistency between this project and the
International Accounting Standards Board (IASB)/US Financial Accounting Standards Board (FASB) conceptual
framework project, final decisions on a disclosure framework must await progress on that larger
project. Information on the overall conceptual framework project is available on the IASB and FASB websites.
Contact Information
Questions or comments on this project should be directed to either:
Karen Jones, CA
Principal, Accounting Standards
Telephone: +1 (416) 204-3463
Fax: +1 (416) 204-3412
or
Mark Walsh, FCA
Principal, Accounting Standards
Telephone: +1 (416) 204-3453
Fax: +1 (416) 204-3412
Canadian Accounting Standards Board
277 Wellington Street West
Toronto ON M5V 3H2 Canada
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