The International Accounting Standards Board (IASB) has effectively ruled out the prospect of amending the disclosure requirements in its pensions accounting and fair value measurement rule book.
Speaking during the board’s 18 July meeting, chair Andreas Barckow said he sensed “limited appetite” for taking forward the board’s proposals for a fresh approach to disclosure in International Accounting Standard 19 (IAS 19) and International Financial Reporting Standard 13 (IFRS 13).
There was, however, he said, more support among the board for examining feedback on the project and seeing what lessons could be learned to inform the board’s future work on disclosures.
Staff will now bring back proposals for a future meeting to consider on the so-called middle way.
The IASB issued its disclosure project exposure draft in March 2021 with the aim of trialling a fresh approach to disclosure. Critics of IFRS disclosures complain that they can include irrelevant information and omit highly material details.
Rather than requiring a fixed list of disclosures, the board instead focused on a series of objectives aimed at teasing out the most relevant information, alongside a catch-all or high-level disclosure.
The board hoped this new approach would encourage preparers to take a broader view of disclosures, which have tended to emerge on a piecemeal basis across the board’s many standards.
At its July 2018 meeting, the IASB decided to trial the new thinking on IAS 19 and IFRS 13 as a test bed.
However, as IPE reported in March, the board’s disclosure drive met with a largely mixed response from constituents.
The mixed reaction to the project left the board with three possible alternative ways forward:
- terminate the project;
- finalise the proposed approach with limited changes; or
- develop a ‘middle-way’ alternative.
In response to a question from IASB member Bruce Mackenzie on what this middle-ground approach might look like, staff indicated it would take the form of guidance that the board could use in its future standard-setting activities when developing or drafting disclosure.
They added that they would be exploring not only the content of the guidance but also the question of whether it should be issued as some form of guidance on the board’s website or added to the conceptual framework.
In their early thinking on a possible middle-ground approach, staff developed proposals organised around a non-prescriptive overall disclosure objective and prescriptive specific disclosure objectives with mandatory items of information.
The staff explored this approach with members of the IASB’s Accounting Standards Advisory Forum on 12 July.
In a slide show prepared for that meeting, the staff floated the possibility of including a cross-reference to paragraph 31 of IAS 1, Presentation of financial statements, “to remind entities about the need for making materiality judgements in applying disclosure requirements”.
The European Financial Reporting Advisory Group’s ASAF representative signalled support for that middle-ground proposal but questioned the need for the overall disclosure objective given that paragraph 31 of IAS 1 offered sufficient basis for encouraging disclosure.
The board’s chair noted, however, during the 18 July meeting that there was a “lack of consensus “about what that middle ground specifically was because […] different people associate different things with the middle ground.”
The IASB originally indicated during its June meeting round that it would decide on the fate of the disclosure project in September.