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Basis For Conclusions On IFRS 14 Disclosure

Basis For Conclusions On IFRS 14 Disclosure

Basis For Conclusions On IFRS 14 Disclosure : In December 2012, the IASB launched a survey on disclosures, which was directed at preparers, users and others interested in or affected by disclosure requirements. The results were discussed in a public discussion forum on Disclosures in Financial Reporting in January 2013. The survey and the discussion forum were aimed at assisting the IASB to gain a clearer picture on the perceived “disclosure problem” (ie identifying disclosure requirements that create a burden for preparers but do not provide users with sufficient relevant information). The views of most financial statement preparers that took part in these events identified the primary problem as the disclosure requirements being too extensive, with not enough being done to exclude immaterial information, which has been referred to as “disclosure overload”. Similarly, many users of financial statements felt that preparers could do more to improve the communication of relevant information within the financial statements, rather than leaving users to sift through large amounts of data.

Basis For Conclusions On IFRS 14 Disclosure

Basis For Conclusions On IFRS 14 Disclosure : With this in mind, this Standard sets out a general objective for disclosure as well as a list of detailed items that might be useful in achieving that objective. The IASB has previously concluded that it is unnecessary, in general, to state explicitly that specified disclosures relate only to material items because all Standards are governed by the concept of materiality as described in IAS 1 Presentation of Financial Statements and in IAS 8. The IASB has decided, consistent with its previous conclusions, not to specifically refer to materiality in this Standard. However, this Standard contains other explicit guidance to clarify that preparers should use their judgement to decide which of the detailed items are necessary to achieve the objective and what level of detail to provide.

Basis For Conclusions On IFRS 14 Disclosure

Basis For Conclusions On IFRS 14 Disclosure : The IASB thinks that an understanding of an entity’s different types of
rate-regulated activities is important for understanding the entity as a whole. In addition, an understanding of each class of regulatory deferral account is considered important because that can provide information about the nature of the rate regulation and the potential timing of related cash flows. Consequently, this Standard requires the disclosure of qualitative and quantitative information for each type of an entity’s rate-regulated activities and each class of regulatory deferral account balance, because this will provide information that is more useful in assessing the impact of different rate-regulatory environments.

Basis For Conclusions On IFRS 14 Disclosure

Basis For Conclusions On IFRS 14 Disclosure :The IASB thinks that most entities that already recognise regulatory deferral account balances in accordance with US GAAP, or similar requirements or practices in other jurisdictions, currently provide most of the information required to be disclosed  of this Standard. However, the IASB observed that the information is often disclosed in various places throughout the financial statements in a way that can make it difficult for a user to appreciate the overall effect that rate regulation has had on the amounts recognised in the financial statements. Consequently, this Standard requires that entities meet the disclosure requirements by providing a table, containing aggregated information, and showing a reconciliation of the movements in the carrying amounts in the statement of financial position of the various categories of regulatory items. This table will be required unless another format is more appropriate. The IASB noted that such a table, presenting information in a structured manner, would assist financial statement users in understanding how the entity’s reported financial position and comprehensive income have been affected by rate regulation.

Basis For Conclusions On IFRS 14 Disclosure

Basis For Conclusions On IFRS 14 Disclosure :Location of qualitative disclosures

The IASB observed that many entities provide, often in the management commentary reports that accompany the financial statements, a qualitative description of the nature and extent of the effect of rate regulation on its activities. The IASB acknowledges that the nature and extent of rate regulation can have a significant impact on the amount and timing of revenue and cash flows of a rate-regulated entity. Hence, the IASB concluded that such disclosures should be part of the financial statements and they could be given either in the financial statements or incorporated by cross-reference from the financial statements to some other statement that is available to users of the financial statements on the same terms as the financial statements and at the same time. This approach is intended to reduce duplication of information and is consistent
with some types of risk disclosure required by IFRS 7 Financial Instruments: Disclosures.

Basis For Conclusions On IFRS 14 Disclosure

Basis For Conclusions On IFRS 14 Disclosure : The IASB thinks that an understanding of an entity’s different types of
rate-regulated activities is important for understanding the entity as a whole. In addition, an understanding of each class of regulatory deferral account is considered important because that can provide information about the nature of
the rate regulation and the potential timing of related cash flows. Consequently, this Standard requires the disclosure of qualitative and quantitative information for each type of an entity’s rate-regulated activities and each class of regulatory deferral account balance, because this will provide information that is more useful in assessing the impact of different rate-regulatory environments.

Basis For Conclusions On IFRS 14 Disclosure

Basis For Conclusions On IFRS 14 Disclosure : A Standard that permits first-time adopters of IFRS to continue to apply their existing policies for the recognition, measurement, impairment and derecognition of regulatory deferral account balances will help those entitiesavoid having to make a major change to their accounting policies for regulatory deferral account balances until the comprehensive Rate-regulated Activities project is completed. The related presentation and disclosure requirements should help to reduce the disruption to information available for trend analyses for these entities on transition to IFRS, until the IASB can consider these issues in its comprehensive project. This would enable rate-regulated entities to overcome the barrier noted  and, consequently, to make the transition to IFRS.

Basis For Conclusions On IFRS 14 Disclosure

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