The Institute of Chartered Accountants of Scotland (ICAS) and the New Zealand Institute of Chartered Accountants (NZICA) have launched a project with the aim of reducing the volume of disclosure requirements in International Financial Reporting Standards (IFRS).
There has for some time been concern about the increasing size of annual reports and the financial statements therein. The risk is that readers are being blinded by so many numbers that the important main messages are lost. The International Accounting Standards Board (IASB) has asked the two Institutes to research this problem, reviewing the levels of disclosure requirements in existing IFRS and recommending deletions and changes to those requirements.
The project is being led by an oversight group of preparers, users and accountants in practice. The group is jointly chaired by Isobel Sharp, partner at Deloitte LLP and ICAS past president, and Tony Frankham, professional company director and NZICA past president. It is currently intended that the results of the project will be delivered to the IASB by the end of June 2011.
Isobel Sharp commented, the issue of excessive disclosure has vexed those involved in financial reporting for many years now. This project is a real opportunity to recommend practical improvements to IFRS financial statements. We will be suggesting specific deletions and changes, on a standard by standard basis, to disclosure requirements in IFRS. Our goal is to help the IASB ensure that financial reports are more concise, but still transparent and understandable to investors and other users of financial information.‟
In expressing his willingness to be involved in this project Tony Frankham said he had received feedback from some users regarding the relevance of extensively detailed financial reports, and in turn the usefulness of some of the detail for the reader. "This project will be able to offer valuable views from different reporting jurisdictions and draw on the experience of preparers, issuers, auditors and users. My sense is that this review is very timely".
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