BALJINDER CHEEMA, AMY EASTON, ERVIN GUTIERREZ, ISHMEET KAUR, KYLIE MARETT, JUAN LEMUS-LAVARREDA

EXPOSURE

DISCLOSURE

AGENDA❑ The Basics

❑ The Back Story

❑ Information Asymmetry

❑ This is how we do it

❑ Cultural Attributes

❑ IASB vs FASB

❑ Regulation

❑ Pillars of Disclosure

❑ Recommendations

The Basics

❑ What is disclosure?

❑ Types of Disclosure

❑ What is the main issue?

The Back Story

1600s 1700s 1800s 1900s Today

❑ Users vs management❑ No boundaries

❏ Gradual amendments❏ Complexity and overload

Information Asymmetry

Capital Market

Management InvestorsInformation

This is how we do it

Analysis of Findings

Questionnaire

FASBExposure drafts and responses

Survey with CPAs

Exposure Draft- Questions1. Would assessing materiality subject to the proposed changes to

paragraphs 235-10-50-7 through 50-8 be any easier than under current

GAAP? If yes, please explain why.

2. Would applying the amendments in this proposed Update

significantly increase or reduce costs of preparing the notes to financial

statements? Why or why not?

3. Would the amendments in this proposed Update change the

information you otherwise would include in the notes to financial

statements? Why or why not? If yes, how would that increase,

diminish, or otherwise change the notes’ usefulness to investors,

creditors, and other financial statement users?

4. Do you expect regulatory, legal, or audit consequences that would

affect your ability to consider materiality when selecting information to

be disclosed in notes to financial statements? Please explain.

5. How would you disclose information in comparative financial

statements if your assessments of materiality differed in different

years?

6. Should the Board eliminate from the Accounting Standards

Codification phrases like “an entity shall at a minimum provide”

and other wording that could appear to limit an entity’s discretion to

omit immaterial disclosures? Are there particular Topics or Sections

in which those changes should not be made? Are there additional

paragraphs within the Accounting Standards Codification in which

the wording is particularly restrictive and is not identified in

Appendix B of this proposed Update? If so, please identify them.

7. Do you agree with the proposed amendment that would

explicitly state that the omission of an immaterial required

disclosure is not an accounting error? Why or why not?

8. Are there considerations other than those discussed in this

proposed Update that would apply to not-for-profit entities?

9. Should the proposed amendments be effective upon issuance?

Exposure Draft - Responses

Survey Questions

1. What’s your opinion on the quality information provided in public company disclosures?

2. Do you believe that disclosures tend to contain immaterial information?

3. How often do you use disclosures for investments decisions?

4. How reliable do you find disclosures?

5. Are the disclosures communicating in an effective manner?

6. Is it effective to find information as users in the Financial Statements?

7. Do you think culture influences the amount or the quality of disclosures in the financial statements?

Survey results

Survey results

CULTURAL ATTRIBUTES

❑ North America

❑ Europe

❑ East Asia

IASB vs. FASB❏ Rules vs. Principles

❏ Consolidation

❏ Income Statement

❏ Inventory Valuation

❏ Research and Development costs

❏ Convergence of Accounting Standards

REGULATION

❑ FASB Exposure Draft

•Allow for professional judgement

•Utilize Supreme Court definition

❑ Securities and Exchange Commission

❑ Ontario Securities Commission

Pillars of Disclosure

Tailoring

Formatting

Materiality

RECOMMENDATIONS

❑ Take advantage of technology

❑ Form disclosure committee

❑ Act now