Not only will I be blogging about the Unit of Account / Disaggregation / Net vs. Gross / Whatever Words you Use, but I also will be posting about the FASB’s new disclosure project.

So, what do you say when you teach your classes?? Probably what I say “oh yes and there are disclosures.. mumble mumble.”

Why does the FASB need a disclosure project? Probably for the same reason you (and I) are inarticulate in class. It’s a dumping ground, with some stuff better disclosed than others… not the primary focus.

So what has evolved over time? The CFA Institute in their “A Comprehensive Business Reporting Model” July 2007 document .. that disclosures are often comprised of:

Boilerplate information – disclosure that has had every iota of economic essence carefully excised and that does not change from year to year, except for the occasional substitution of a new number of two.

Redundant disclosure – that is, information that may or may not otherwise be useful but that occurs in the exact same form in two or more places in the same financial statements.

Useless information – that which is condensed and appears to provide quantitative or other detailed information while, in fact, providing little or nothing of substance. For example, some companies have been known to offer as disclosure something similar to: “Our various classes of fixed assets are depreciated using a variety of methods, including straight line, sum-of-the-years’ digits and several declining balance methods, with estimated useful lives ranging from 5 to 40 years.”

Otherwise useful information that has been embedded in multiple pages of otherwise uninformative prose. Wherever possible, disclosures should be provided in tables, charts, or other concise templates that minimize both investors’ search efforts and the company’s expenditure of resources.