On the ‘Disclosure Initiative – Principles of Disclosure’: The EAA Financial Reporting Standards Committee’s View

Abstract

This paper summarises the contents of a comment letter produced by a working group of 12 academics in response to the International Accounting Standards Board (IASB) Discussion Paper on principles of disclosure. The comment letter was submitted by the Financial Reporting Standards Committee (FRSC) of the European Accounting Association (EAA). The work includes reviews of relevant academic literature of areas related to the various questions posed by the IASB in the Discussion Paper, including the 'disclosure problem' and the objective of the project, the suggested principles of effective communication, the roles of the primary financial statements and notes, the location of information and the use of performance measures. The paper also discusses the disclosure of accounting policies, the objectives of centralised disclosure, and the New Zealand Accounting Standards Board staff's approach to disclosure.

Business Combination Under Common Control (BCUCC) - What Kind of Disclosure is Enough? The Polish Experience

“…A similar conclusion about the link between disclosures scope and cultural factors appears in another research (Abdullah et al, 2015). Some authors agree that more focus should be put on a more robust enforcement regime to improve current disclosure practices adopted by companies preparing their financial reports following IFRS (Saha and Bose, 2021;Hellman et al, 2018;Abad et al, 2020). However, research insisting on the opposite also exists.…”

Do IFRS disclosure requirements reduce the cost of capital? Evidence from Australia

“…Furthermore, we echo the suggestions of prior studies (e.g., Barker et al ., 2013; Hellman et al ., 2018; Abad et al ., 2020) regarding the need for a greater focus on a stronger enforcement regime to improve current disclosure practices. Hail et al .…”

“…More recently, Abad et al . (2020) highlight that focusing excessively on firm‐specific relevance could make information less comparable across entities: these authors also highlight that the IASB is placing too much focus on relevance and is placing less emphasis on faithful representation with regard to disclosure. Furthermore, Abad et al .…”

“…Furthermore, Abad et al . (2020) provide examples of disclosure principles already included in the IFRS (e.g., IAS 1 Presentation of Financial Statements , IFRS 7 Financial Instruments: Disclosures and IFRS 12 Disclosure of Interests in Other Entities ) that are difficult to enforce, suggesting that enforcement bodies may prefer specific requirements and a checklist over a principles‐based approach.…”

“…However, the cause of the disclosure overload problem, the concept of introducing disclosure principles to address this problem and the review of specific IFRS disclosure requirements with a view to amending them have fuelled much discussion and debate (see Section 2 for further details). Several academic studies identify conceptual issues, highlighting key academic literature that sheds light on the alleged disclosure overload problem (Barker et al ., 2013; Hellman et al ., 2018; Abad et al ., 2020). The disclosures required by the IFRS are intended to play an important role in informing users about the high level of judgement utilised in measurement methods (e.g.…”