The International Accounting Standards Board (Board) has launched a public consultation on a new approach to developing disclosure requirements in IFRS. As part of this document, the International Accounting Standards Board (IASB) has also proposed additional requirements for fair value measurement (IFRS 13) and employee benefits (IAS 19). In both cases, the authors hope, this will allow reporting agents to get rid of the pattern of disclosures to some extent and improve professional judgment on this part, and provide reporting users with more useful information for decision-making.
The authors of the amendments indicate that the notes to IFRS statements do not always contain sufficient information useful to investors, and the information is not always disclosed effectively. And vice versa, there is too much irrelevant information, which is indicated simply “for the sake of appearance”, and blind compliance is a determining motive for many compilers.
In response to the perfectly fair comments of many stakeholders, the Board has developed and introduced a new approach that will further develop disclosure requirements. With this approach, compilers, their auditors and other users of the report will be able to make more effective professional materiality judgment on the information disclosed, which will make it more useful to investors.
The new approach will pay more attention to the basic objectives of the current disclosure requirements, which will oblige organizations to apply professional judgment and provide information to investors according to their needs. At the same time, the Board will give greater prominence to the principles, minimizing the specifically stipulated mandatory disclosures of individual items and focusing more on materiality.
The authors have already tested their new approach using two standards long selected for this purpose: IFRS 13 Fair Value Measurement and IAS 19 Employee Benefits.
“We believe this new approach to developing disclosure requirements in IFRS Standards can serve as a catalyst to improve information to investors. However, real improvements can only be achieved if all those involved – companies, auditors, regulators and investors - work together,” says Hans Hoogervorst, current Chairman of the IFRS Board.
The consultations will be opened until October 21, 2021.