THE FRC and its French counterpart, the Autorité des Normes Comptables (ANC), have published a discussion paper aimed at addressing the bloated nature of notes to financial statements.
As part of a joint project with the European Financial Reporting Advisory Group (EFRAG), the discussion paper sets out some key principles that EFRAG, the ANC and the FRC consider essential to design of an effective disclosure framework.
Notes to the financial statements have ballooned over the years as the IASB has added existing disclosure requirements in IFRS to support more transparency. As a result, the notes that accompany financial statements have become so extensive that investors and creditors can no longer ‘see the wood for the trees', the FRC said.
There is a risk that the notes to the financial statements have become a real burden, while it is unclear that they help users understand the numbers in the financial statements, the regulator added.
"Efforts to be undertaken are not limited to IFRS, as shows the cooperation EFRAG, ANC and FRC have had with the FASB who have been undertaking a similar project. It is hoped that the discussion paper leads to a constructive debate within Europe and elsewhere," the FRC said.
The discussion paper is open for comment until 31 December 2012.
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