In a speech at the Compliance Week annual conference, Leslie Seidman, FASB Chairman, discussed two important and very timely issues related to the Board’s agenda – disclosure overload and the FASB’s related disclosure framework project and the Board’s efforts at balancing the cost and benefits of their proposals.
With respect to disclosure overload, Chairman Seidman pointed out that the goal of the FASB’s disclosure framework project is to improve disclosure effectiveness, not merely reducing disclosure content. She indicated that effective disclosures are those that “make financial statements more understandable to investors and other [financial statement] users.”
On the issue of balancing the cost of providing financial statement information with the associated benefits of that information, Chairman Seidman stated that, of course, she understands that financial reporting has economic consequences. Among the consequences she noted were:
- Providing information that contributes to supporting the goal of efficient capital markets
- Reducing the cost of capital resulting from the public availability of credible financial information, and
- Corporate accountability.
Chairman Seidman pointed out that the FASB strives to issue financial accounting and reporting standards that provide financial statement users information for which the related benefits to users justifies the cost of preparing and using that information.
The text of Chairman Seidman’s speech can be downloaded from the FASB’s website (http://www.fasb.org/cs/ContentServer?site=FASB&c=Document_C&pagename=FASB%2FDocument_C%2FDocumentPage&cid=1176160082895)