In a post on the International Accounting Standards Board's (IASB's) website, board member Gary R Kabureck explains what the board has been doing to make financial statement disclosures more legible and clearer for investors. He calls on report preparers, auditors and users to maintain “reasoned judgement” but acknowledges that current practices are ingrained and it will take more than guidelines and standards to change behaviour.

He explains that, since 2013, the board has started to take steps to improve disclosure effectiveness, with the aim of making disclosures more meaningful by improving their communication value while simplifying the preparation process. Some of the steps outlined by Kabureck include:

• Allowing preparers of statement disclosures the flexibility to choose how to use footnotes (amendment to IAS 1 Presentation of Financial Statements).
• Disclosures should aim to provide information for the typical 'primary user', which the board describes as: '...existing and potential investors, lenders and other creditors who do not have the ability to obtain this information directly and who have a reasonable knowledge of business and economics...' More detailed information, intended for a very limited audience, could in fact obscure more important information needed by the majority of users.
• Preparers and their auditors need to use their own judgement to choose what primary users need to know, in order to make their investment decisions about the company. The IASB's current Conceptual Framework project includes the proposal that all new IFRS standards will have an objectives paragraph, introducing the disclosures section, to help preparers decide what they should disclose.
• The IASB intends to publish a discussion paper – Principles of Disclosure – to address this entire process. It will cover: principles of aggregation and disaggregation; use of cross referencing to other sections of reports; the purpose of accounting policy disclosures; communication principles and formatting; the role of non-IFRS information, including performance measures, etc. Comment on this discussion paper will provide the basis of the board's future approach to disclosures.
• The board is also considering how to handle the occurrence of normal immaterial errors, which can take a great deal of resources to correct. Kabureck raises the possibility “closing the loop” on this point.
• He finally comments that, the key question a reporting decision needs to answer is: “Could this disclosure reasonably influence the decision of a primary user to make or change buy, hold, sell or lending decisions. If it does, it is material. If it does not, it is not.”