Improving reduced disclosure

Financial reports are set to become more relevant and concise for many not-for-profit and non-listed entities under changes proposed by the AASB.

The board has reviewed standards specifying information to be disclosed in financial reports of entities eligible to use the reduced-disclosure regime (RDR).

Proposals in exposure draft 277 Reduced Disclosure Requirements for Tier 2 Entities aim to address concerns about the length and relevance of reports produced under the regime.

Kris Peach said, ‘We are keenly aware of the need to cut unnecessary or overly detailed disclosures and to increase the relevance of required disclosures.  These proposals strike a good balance between preparer effort and user needs.’

In practice, few entities that may adopt RDR have done so, many instead issuing ‘special purpose’ reports.

Kris Peach said, ‘With increasing concern from regulators, investors and the broader community about the transparency and comparability of special-purpose financial reports, it is our hope that these proposals will encourage more entities to adopt general-purpose financial reports using the RDR regime.’

In particular, the AASB is proposing to reduce the disclosures required around financial instruments and interests in other entities based on feedback from constituents that these disclosures were too detailed and of little interest to users.

Closing date for feedback is 26 May.
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