FASB Staff Draft on Financial Statement Presentation

The FASB and the IASB took an unusual step on July 1, 2010 by issuing a Staff Draft of an Exposure Draft on Financial Statement Presentation that prescribes the basis for presentation of general purpose financial statements to ensure consistency with an entity’s financial statements for previous periods and to promote comparability with the financial statements of other entities. It sets out overall requirements for the presentation of financial statements, requirements for the structure of financial statements, and principles for classification and disaggregation of information in the statements.

The draft reflects the cumulative, tentative decisions made by the Boards concluding with their joint meeting in April 2010. Work on the project is continuing, and the proposals are subject to change before the Boards decide to publish an Exposure Draft for public comment.

This Staff Draft reflects the Boards’ decision to engage in additional outreach activities before finalizing and publishing an Exposure Draft. Those activities will focus primarily on two areas: (1) the perceived benefits and costs of the proposals and (2) the implications of the proposals for financial reporting by financial services entities.

While the Boards are not formally inviting comments on this staff draft they welcome input from interested parties. They expect to publish an Exposure Draft for public comment in early 2011.

Scope
An entity shall apply this proposed guidance in preparing and presenting general purpose financial statements in accordance with U.S. GAAP. It applies equally to all entities except a not-for-profit entity and a benefit plan within the scope of the FASB Accounting Standards Codification™ Topics 960, Plan Accounting—Defined Benefit Pension Plans; 962, Plan Accounting—Defined Contribution Pension Plans; and 965, Plan Accounting—Health and Welfare Benefit Plans. In addition investment companies and other entities identified in Codification paragraph 230-10-15-4 are not required to present a statement of cash flows.

This proposed guidance does not change the accounting principles and reporting practices in Codification Topic 270, Interim Reporting.

The Staff Draft is available on the FASB website, www.fasb.org.

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