What Does Good Disclosure Look Like?
The International Accounting Standards Board (IASB) recently issued an amendment to the IAS Statement of Cashflows. This week Nick Anderson, IASB Board member, discusses the objectives of the IAS 7 disclosure requirement and gives some advice for companies looking to make their disclosures as useful as possible.
The new amendment requires companies to include information in their disclosures that allow the report users to evaluate changes in liabilities arising from financing activities – both from cash flows and non-cash changes. The health of a business depends in a large part on financing – so it’s essential that report users can understand a company’s cash flow and liabilities through their disclosures.
Anderson highlights what effective disclosure should look like, suggesting that disclosure will meet user needs when it can be easily reconciled with other areas of financial statements, provides granular information, provides explanations where necessary and is communicated simply and clearly.
This is all good advice: clear, usable and searchable reporting is essential to help investors to make effective decisions. Even better, of course, when more and more of it is disclosed as structured data!
Read Anderson’s concise and useful article here.