Totals and subtotals will be the main event at Tuesday’s Financial Accounting Standards Board meeting. The FASB staff will be presenting its recommendations for how totals and subtotals should be expressed in the new financial statements, which are set to be released in draft form in a discussion document during the second quarter of 2008.
The project on financial statement presentation is a joint endeavor between FASB and its global counterpart, the International Accounting Standards Board. Launched in 2004, the project’s goal is to improve the way financial information about companies is presented to investors, creditors, and others. The main thrust behind the project is to “portray a cohesive financial picture” of companies and “separate financing and business activities,” according to a presentation delivered by FASB member Donald Young at a conference held Monday on financial reporting, produced by Financial Executives International, a trade organization.
When finalized, the changes will be “sweeping,” Young told CFO.com. But for now, the project is still in its “R&D” phase, added Young. (A development version of the sample balance sheet, cash flow statement, and income statement can be found on the FASB website.) Young encourages financial statement users and preparers to start thinking about — and submitting comments to FASB — on the new presentation, which is a rework a 40-year-old format.
Last week, the IASB held its meeting to thrash out how totals and subtotals would be treated on the new statements. The recommendations from the IASB staff are available on its website.
Essentially, the new format aims to disaggregate line items, if doing so improves the usefulness of the document, and help users understand such items as measurement bases, uncertainty in measurement, the causes of a change to assets and liabilities, the difference between cash-based and accrual accounting, and the effects of noncash activities, noted Young at the conference.