Earlier today, the FASB released a proposal on financial statement presentation. The proposal – in the form of an amendment to FASB’s Conceptual Framework – is likely to have a significant impact on financial reporting going forward for two reasons: (1) the proposal is very broad in scope, and (2) although Concepts Statements are not ‘authoritative,’ they form the basis upon which FASB is to develop accounting standards. Of note, FASB seeks comment on a proposed set of factors for determining when line items are necessary in the financial statements, and whether contracts should be aggregated or disaggregated within those line items.
Broad Scope Addressing Presentation
FASB described the proposal as being “designed to provide a foundation for future standards to enhance financial statement users’ abilities to assess prospects for future cash flows by addressing how to:
Factors to Consider for Line Items
Of note, in addition to seeking comment on all aspects of the proposal, FASB specified it seeks comment on a set of proposed factors for determining when a line item should be presented, including whether those factors would be appropriate in considering when to present contracts individually, or in an aggregated fashion. These factors, which appear in paragraph 37 of the proposal, are:
The comment deadline on FASB’s proposal is November 9, 2016. For further information, see the proposal, entitled: Proposed Statement of Financial Accounting Concepts – Concepts Statement 8: Conceptual Framework for Financial Reporting — Chapter 7: Presentation , and the related FASB in Focus summary issued by FASB. The proposal on financial statement presentation issued today follows last week’s release by FASB of an Invitation to Comment: Agenda Consultation, seeking constituent (investors, creditors, preparers, auditors, analysts, and others) input into what items should be on, and prioritized within, the FASB’s standard-setting agenda. In related news, see How CEOs, CFOs Can Communicate Financial Reporting More Effectively .