IMMATERIAL DISCLOSURES bloat financial statements by 30% and must be reduced, according to ICAS and the New Zealand Institute of Chartered Accountants.
A joint project, Losing the Excess Baggage - reducing disclosures in financial statements to what's important was presented this morning to 120 accountancy and finance leaders, with several report preparers lamenting their growing burden and loss of directorial agency.
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Severn Trent CFO Mike McKeon said today's disclosure requirements are "inflexible" and make no room for preparer judgment; he questioned whether the end product "is giving people what they need".
A working party examined existing international financial reporting standards and concluded greater focus on material disclosure is needed, warning the present glut of information risks obscuring key data.
A financial statement was re-drafted according to their recommendations, resulting in a 30% reduction in pages. Contributor Isobel Sharp said the eventual saving could be even greater as the experiment only covered completed IFRS, not those still being drafted.
Ian Mackintosh (pictured), vice-chairman of the International Accounting Standards Board, said the project was "practical" and contained "solid suggestions".
He acknowledged that preparers are want less onerous financial statement requirements while users are demanding more, calling this "the IASB dilemma".
However, Mackintosh talked of investor feedback calling for greater disclosure in financial statements and said the problem of hefty reports "will probably get worse".
The meeting lacked investors to give their view on disclosure requirements. Instead, leading CFOs and account preparers for the most part rallied behind the simplifying spirit of the paper, with a straw poll showing the majority thought it was "heading in the right direction".
ICAS Chief Executive, Anton Colella, said: "There is momentum growing for change. We heard the honest views of many of the most senior finance directors at the most important UK companies and they are telling us that the current approach to financial statements has got to change."
Participants called for the IASB to consult on the paper but Mackintosh was non-committal, recalling the vast amount of work already piled up for the global standard setters.
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