Last week, the FASB held an education session on the Disclosure Framework project. They continue to view disclosure categories as: entity-wide disclosures, line-item disclosures, and disclosures related to conditions not recognized in the financials with related subcategories. This session centered on the goals of the project and developing qualitative principles. There is also a coordination effort planned on this project with the European Financial Reporting Advisory Group (EFRAG). Here are some topics that were discussed:

1.) Materiality: Materiality continues to be viewed as an entity-specific concept; however, one of the goals of the project is to facilitate a behavioral change in management so that they focus more on applying materiality in disclosures (both in removing immaterial ones and using the general principle of disclosing all material information). The board is also considering developing ranges of disclosures (i.e. a minimum disclosure set and a heavy disclosure set) to help investors understand the continuum of possible disclosure length for certain items.

2.) Relevance: There was a comment made about alternative measurement disclosures and how those should be rarely needed since presumably the prevailing measurement is used in the financial statements. The current draft states the goal of alternative measurement disclosure as “disclosing measures that could be relevant to users” but theoretically many different measurement bases could be relevant for small groups of users. The discussion focused on how to refine the description of users. One solution discussed was using the language “likely relevant to most users”.

3.) Faithful representation and verifiability: There was a discussion on disclosing information that is relevant but hard to verify. This relates somewhat to the PCAOB proposal to have auditors verify certain forward-looking information. One of the questions that came up is how much do investors even distinguish between unaudited information and audited information. Also, how much do investors care if certain information is unaudited in the financials vs. relying on faithful representation of management?

4.) Financial statement presentation tie-in: There was a mention of how this project might relate to the financial presentation project currently on hold. For instance, the concept of disaggregating financial statement line-items raises the question of effective aggregation in the financial statements themselves. The example used was with pension components which are combined in the financials but require detailed disaggregation disclosures.

There is still no working draft but just some food for thought moving forward.