FASB's Disclosure and Framework: Interim Reporting Project Report

This report provides a comprehensive analysis of the Financial Accounting Standards Board (FASB) project titled "Disclosure and Framework: Disclosures-Interim Reporting." The report begins with an executive summary outlining the project's objective, which is to improve the effectiveness of information disclosure in financial statements and associated notes. It then delves into the project's history, background, and current status, highlighting the FASB's goal of enhancing the clarity and conciseness of information communicated according to Generally Accepted Accounting Principles (GAAP). The report discusses the proposed changes in four key areas: fair value measurement, compensation-retirement benefits, income taxes, and inventory. It explains the rationale behind these changes, emphasizing the aim to make disclosures more effective, useful, and flexible while minimizing the volume of required information. The report further explores the effects of comments from entities and individuals on reporting requirements. A research log and annotated bibliography are included. Finally, the report assesses the impact of the proposed changes on relevant stakeholders, concluding with a summary of the project's implications.

Running head: INTERMEDIATE ACCOUNTING
Intermediate Accounting
Name of the Student
Name of the University
Author’s Note

1INTERMEDIATE ACCOUNTING
Executive Summary
The key purpose of this report is to provide description and other associated information on
the FASB’s project named Disclosure and Framework: Disclosures-Interim Reporting. The
outcome of the analysis of this report shows that increasing the effectiveness of disclosure of
information in the financial statements associated notes is the main aim of the Board to
introduce these changes. The main implication is that the introduction of these changes have
created both positive and negative impacts on the stakeholders associated with the business
organizations.

2INTERMEDIATE ACCOUNTING
Table of Contents
Introduction................................................................................................................................3
Project History, Background and Status....................................................................................3
Discussion on the Proposed Changes and Reason for Changes.................................................4
Effects of Comments on Reporting Requirements.....................................................................5
Research Log..............................................................................................................................5
Annotated Bibliography.............................................................................................................6
Relevant Stakeholders and the Impacts of Proposed Changes on each of Them.......................7
Conclusion..................................................................................................................................7
References..................................................................................................................................8

3INTERMEDIATE ACCOUNTING
Introduction
The main aim of the Financial Accounting Standards Board (FASB) is the
establishment as well as improvement of the standards and practices of financial accounting
reporting for guiding and educating the public that includes financial standards issuers,
auditors, investors and others users of the financial statements. It is also the responsibility of
FASB to assess whether there is any need for the introduction of any financial reporting
standard for strengthening the practice of financial reporting. The presence of many ongoing
projects can be seen under the supervision of FASB. This report taken an honest attempt of
analyzing and evaluating the different aspects associated with one of the major ongoing
projects of FASB that is Disclosure and Framework: Disclosures-Interim Reporting. There
are certain objectives of this report. This report first discusses about the history, background
and status of this particular project of FASB. The next part discusses about the proposed
changes in the ongoing project along with the reason for recommending these changes. The
next parts discuses about the usefulness of SEC 10-K comments on this project. This report
also involves in preparing a research log and annotated bibliography. The last part discusses
about the impact of the proposed changes on different groups of relevant stakeholders of the
business organizations.
Project History, Background and Status
The main objective as well as main attention of this disclosure framework projects is
to bring improvement in the efficiency of disclosures in the financial statements associated
notes through the facilitation of clear and concise communication of the information needed
by Genially Accepted Accounting Principles (GAAP) and this GAAP has major importance
to the users of the financial statements of the business organizations (fasb.org, 2020).
A proposed concepts Statement of FASB was issued by the FASB, Conceptual
Framework for Financial Reporting – Chapter 8: Notes to Financial Statements on March 4,
2014. The same was finalized by the board on August 28, 2018 Chapter 8 of Concepts
Statements 8 and this identified a wide range of potential information in order to take into
account by the Board at the time to make decisions on the disclosure necessities for a specific
FASB Accounting Standards Codification Topic (fasb.org, 2020). From this wide set, a
narrower set of disclosure will be identified by the Board about that particular Topic that is
required based on the particular assessment and evaluation that whether the expected benefits
of the business organizations delivering the information provided adequate justification to the
expected costs. The main utilization of the Chapter 8 of Concepts Statement 8 can be seen by
the Board as a part of the procedure to establish the requirements of disclosure in the
accounting standards along with the assessment and evaluation of the present requirements of
disclosure in case and when those requirements are considered by the Board (fasb.org, 2020).
Prior to the finalization of the Chapter 8 of Concepts Statement 8, the Board took the
decision of testing the concepts in the proposed Chapter 8 and enhance the effectiveness of
the requirements of disclosure in four major topic. These topic are 1) Fair value measurement
that falls under Section 820-10-50, 2) Compensation-Retirement Benefits which can be seen
in Section 715-20-50, 3 Income taxes under Section 740-10-50 and 4) Inventory under
Section 330-10-50. In addition of these, the Board is assessing and evaluating the
requirements of interim requirements with the aim to modify them for increasing the overall
effectiveness of financial reporting (fasb.org, 2020).
The Board has taken the decision of adding high-value principle to Topic 270, Interim
Reporting, for the purpose of interim disclosure on the parts of SEC Regulations S-X that
were removed along with Rule 10-01, Interim Financial Statements. The Board has also taken

4INTERMEDIATE ACCOUNTING
the initiative of discussing the approach of the staffs towards the project and has provided
direction to the staffs that they need to perform research for the purpose of reassessing the
requirements of disclosure associated with interim reporting. As per current status of the
project, it needs to be mentioned that the staffs of the Board will develop a high-level
principle for interim reporting and will involve in performing research and outreach.
Moreover, as per the recent update on January 7, 2020, the project is in the stage of
preliminary negotiations; and the forthcoming stages include exposure draft, exposure
comment period, exposure draft re-deliberations and final standard. There is only one stage
that has been completed which is added to agenda (fasb.org, 2020).
Discussion on the Proposed Changes and Reason for Changes
As per the disclosure project, proposed changes will be brought in four areas which
are measurement of fair value, compensation – retirement plan, inventory and income taxes.
Measurement of Fair Value (Section 820-10-50) – There are four requirements of
disclosure that will be removed; they are the sum of and reason for transfer between Level 1
and Level 2 of the fair value order, the policy for transfer timing between levels, Level 3
valuation process and change in gains and losses for non-public entities that has not been
realized yet (fasb.org, 2020). Apart from this, there will be modification of three disclosure
requirements; they are disclosure requirement of a non-public entity regarding transfer into
and out of Level 3 fair value hierarchy, disclosure requirement of an entity of the timing of
insolvency of an investee’s assets along with the date of restriction from redemption and the
requirement for communicating information on the measurement uncertainty. The
requirements of disclosure that will be added include alterations in unrealized gains and
losses and the range as well as weighted average of major unobservable inputs (fasb.org,
2020).
Compensation—Retirement Benefits (Section 715-20-50) – There are six specific
disclosures that will be removed from the current standard; they are the amount of accrued
other comprehensive income predictable to be recognized, the amount and timing of plan
assets predictable to be returned to the employer, disclosure requirement associated with the
June 2001 alterations to the Japanese Welfare Pension Insurance Law, disclosures associated
with related party about the sum of future annual benefits, opening balance reconciliation of
plan assets measured for the non-public entities and the impact of 1% point change in
expected health care cost for public entities. The disclosures that will be added include the
weighted average interest crediting rates for each balance plans and a clarification of the
details for key gains and losses associated to the change in benefit plans (fasb.org, 2020).
Income taxes (Section 740-10-50) – There will be the addition of certain new disclosures for
all the entities; they are explanation of an enacted change in taxation law, income or loss
from continuing operation before the disaggregation of the payment of income tax expenses,
income tax expenses from continuing operation, disaggregation of the payment of income
taxes between domestic and foreign, an explanation of situations that are responsible for
changes in assertions about the identified investments and the aggregate of cash, marketable
securities and cash equivalent held by foreign subsidiaries. The disclosures that will be added
include settlements by using present deferred tax assets, the line items included in the
statement of financial position, the explanation on the amount of recognized valuation
allowance and the total amount of unrecognized tax benefits (fasb.org, 2020).
Inventory (Section 330-10-50) – There are certain additional disclosures that will be
required in the existing standard for the purpose of additional disclosure; they are
disaggregation of inventory by components, disaggregation of inventory by base of

5INTERMEDIATE ACCOUNTING
measurement, changes in the balances of inventory that have no relation with the purchase,
manufacture and sale of inventory, a qualitative explanation of the cost types that are
capitalized into inventory, the impacts of last-in, first-out (LIFO) liquidations on income and
the additional of the cost of LIFO inventory method (fasb.org, 2020).
Reason for the Change – The key reason for the introduction of the above-mentioned
changes is to bring improvement in the efficiency of disclosures in the financial statements
related notes for the public and private businesses along with the not-for-profit organizations.
Through the clear communication of information that has major importance to the users of
the financial statements, these changes make the disclosure more effective and useful. These
changes are allowing more discretion and flexibility in the application of present and future
relevant requirements for disclosure on the basis of the specific situations. At the same time,
these provide the business organizations with flexibility in the process of financial reporting.
Minimize the increased volume of necessary disclosure can be considered as another major
aim of these changes (fasb.org, 2020).
Effects of Comments on Reporting Requirements
Comment letters are the letters submitted by the entities and individuals in response to
the requests for public comment on the proposal of new accounting standards or the
amendments in financial standards. The main purpose of these comments can be seen in
providing assistance to the issuing company to make information in the registration statement
clear, free from irregularity and transparent before the final issue of the new financial
reporting standard or the amendments in an existing financial reporting standard. This same
can be seen in this particular FASB project of Disclosure and Framework associated with
interim reporting. For example, First Alliance Bank and The Commercial Bank of Grayson
commented on the project of Interim Disclosure about Fair Value of Financial Instrument.
First Alliance Bank did not support these amendments proposed by FASB on disclose of fair
value as they urged for more discussion regarding the issue (fasb.org, 2020). On the other
hand, The Commercial Bank of Grayson recommended to exempt the non-publicly traded
companies from this requirement on quarterly basis. Therefore, it can be seen that through the
issue of these comments, various individuals and organizations may request the board to
provide more supplemental information so that better understanding on the disclosures or
revised disclosures can be obtained. Therefore, it can be said that the comments have created
a positive impact on the projects of FASB (fasb.org, 2020).
Research Log
No
.
Dat
e
Question
Pursuing,
Information
Sought,
Rationale for
Search
Tool or
Source
Used
Concepts or
Keywords,
Terms,
Phrases
Search
Strategy
Results Decision,
Action,
Next Step
1 15/3 History and
background of
the project
Looked
in
FASB
website
Interim
reporting,
disclosure
requirement
Keyword
search
Found
information on
the objective,
history,
background and
current status of
the project
Will check
other
references
2 15/3 General Looked FASB project Keyword Found Will check

6INTERMEDIATE ACCOUNTING
information on
the FASB
project
in the
website
of EY
search information on
the proposal
associated with
the codification
improvement of
the FASB project
other
reference
materials
3 15/3 Information on
the reasons for
proposed
changes
Looked
in
FASB
website
FASB project Keyword
search
Found the
reasons for which
FASB is
considering to
bring the changes
in the disclosure
requirements
Will check
other
reference
materials
4 15/3 Information on
the updates on
inventory
disclosure by
FASB
Looked
in
Google
Scholar
Disclosure
requirements
Searched
the
keyword
Found that FASB
would adjust or
remove certain
disclosure
requirements
associated with
inventory
Will focus
on more
search of
relevant
references
5 15/3 General
information on
the FASB
project
Looked
in
Google
Scholar
FASB project,
Disclosure
requirements
Keyword
search
Found a timely
analysis of the
disclosure
requirement
project of FASB
Will check
other
reference
materials
Annotated Bibliography
1. Disclosure Framework: Disclosures—Interim Reporting. (2020). Fasb.org. Retrieved 15
March 2020, from
https://www.fasb.org/jsp/FASB/FASBContent_C/ProjectUpdateExpandPage&cid=11761706
90730
This article describes the necessary details on the FASB project of disclosure
requirement; such as objectives and background, exposure documents, media releases and
educational materials, decision of the board, board meetings and others. This article states
that the main focus of this FASB project is to ensure the disclosure requirements is enhanced
for the purpose of effective financial reporting.
2. Ey.com. (2020). US Week in Review. Retrieved 15 March 2020, from
https://www.ey.com/publication/vwluassetsdld/weekinreview_19september2019/$file/
weekinreview_19september2019.pdf
This article discusses about the agenda prioritization of the FASB project of
disclosure requirements of interim reporting. It is mentioned in this article that the Board has
taken the decision of adding high-level principle to Topic 270, Interim Reporting for the
interim disclosure on the basis of the removed proportion of SEC Regulation.
3. Disclosure Framework Project Q & A. (2020). Fasb.org. Retrieved 15 March 2020, from
https://www.fasb.org/cs/ContentServer?
c=Document_C&cid=1176170604146&d=&pagename=FASB%2FDocument_C
%2FDocumentPage

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This article describes the main reasons and motives of the FASB Board for bringing
the amendments in the disclosure requirements. This article also discusses about the decision
process of Board related to these disclosure requirements. This also discusses about the
volume of the financial statement disclosures.
4. Orrell, M., & Tian-Lee, J. (2012). Accounting Roundup.
This article describes the proposed updates of the FASB Board to the disclosure
requirements of inventory. As per this article, FASB discusses about the proposed
modification or elimination of certain requirements of disclosure associated with inventory
with the aim to establish new requirements.
5. Bakarich, K. M., Hossain, M., & Weintrop, J. (2019). Different time, different tone:
Company life cycle. Journal of Contemporary Accounting & Economics, 15(1), 69-86.
This particular article provides an appropriate assessment of the disclosure
requirements of FASB Board related to Disclosure Framework Project which aim in
increasing the overall effectiveness of the financial reporting mechanism of the business
organizations. This also facilitates in better communication of the financial information of the
companies through the financial statements.
Relevant Stakeholders and the Impacts of Proposed Changes on each of Them
There are different stakeholder groups that will be impacted by the proposed changes
in the disclosure requirements of interim reporting by FASB. They are as below:
Board of Directors – The Board of Directors of the companies will be impacted as they will
be necessary for adhering to the new requirements which will consume both effort and
financial resources.
Investors – The investors will be beneficial as they will be able in obtaining more accurate
and precise financial information of the companies on timely manner which will be helpful in
investment decision-making process (Ferretti, 2016).
Banks and other Financial Institutions – Bank and other financial institutions will be
negatively affects as they will have to bear additional costs for providing additional
information through disclosure requirements.
Auditors – The auditors will be beneficial as disclosure requirements under interim reporting
would lead to provide more information to the auditors that will be helpful in audit
engagement in the audit client organizations.
Small Organizations – This will not be beneficial for the small business organizations as the
provision for interim reporting would cost them more in the absence of any additional
benefits. This would affect their financial reporting related operations (Ferretti, 2016).
Conclusion
It can be seen from the above analysis that the main aim of the FASB project of
disclosure requirement of interim reporting is to enhance efficiency of disclosures in the
financial statements related notes. There are four areas where the proposed additions or
eliminations in disclosure requirements will be applied; they are fair value measurement,
compensation and retirement benefits, income taxes and inventory. The above discussion also
shows that reduction in the volume of disclosures in financial reporting is another crucial
reason for these changes in the existing standards. There are certain stakeholders who will be
impacted by the introduction of these changes related to disclosure requirements; they are

8INTERMEDIATE ACCOUNTING
Board of Directors, investors, banks and other financial institutions, auditors and small
business organizations.

9INTERMEDIATE ACCOUNTING
References
Bakarich, K. M., Hossain, M., & Weintrop, J. (2019). Different time, different tone:
Company life cycle. Journal of Contemporary Accounting & Economics, 15(1), 69-
86.
Disclosure Framework Project Q & A. (2020). Fasb.org. Retrieved 15 March 2020, from
https://www.fasb.org/cs/ContentServer?
c=Document_C&cid=1176170604146&d=&pagename=FASB%2FDocument_C
%2FDocumentPage
Disclosure Framework: Disclosures—Interim Reporting. (2020). Fasb.org. Retrieved 15
March 2020, from
https://www.fasb.org/jsp/FASB/FASBContent_C/ProjectUpdateExpandPage&cid=11
76170690730
Disclosure Framework—Disclosure Review: Defined Benefit Plans (Post Issuance
Summary). (2020). Fasb.org. Retrieved 15 March 2020, from
https://www.fasb.org/cs/ContentServer?
c=FASBContent_C&cid=1176171179028&d=&pagename=FASB
%2FFASBContent_C%2FCompletedProjectPage
Disclosure Framework—Disclosure Review: Fair Value Measurement (Post- Issuance
Summary. (2020). Fasb.org. Retrieved 15 March 2020, from
https://www.fasb.org/cs/ContentServer?
c=FASBContent_C&cid=1176171179766&d=&pagename=FASB
%2FFASBContent_C%2FCompletedProjectPage
Ey.com. (2020). US Week in Review. Retrieved 15 March 2020, from
https://www.ey.com/publication/vwluassetsdld/weekinreview_19september2019/$file
/weekinreview_19september2019.pdf
Fasb.org. (2020). Retrieved 15 March 2020, from https://www.fasb.org/cs/BlobServer?
blobkey=id&blobnocache=true&blobwhere=1175818340673&blobheader=applicatio
n%2Fpdf&blobheadername2=Content-Length&blobheadername1=Content-
Disposition&blobheadervalue2=50818&blobheadervalue1=filename
%3D53594.pdf&blobcol=urldata&blobtable=MungoBlobs
Fasb.org. (2020). Retrieved 15 March 2020, from https://www.fasb.org/cs/BlobServer?
blobkey=id&blobnocache=true&blobwhere=1175818341181&blobheader=applicatio
n%2Fpdf&blobheadername2=Content-Length&blobheadername1=Content-
Disposition&blobheadervalue2=72377&blobheadervalue1=filename
%3D53617.pdf&blobcol=urldata&blobtable=MungoBlobs
Fasb.org. (2020). Retrieved 15 March 2020, from https://www.fasb.org/cs/BlobServer?
blobkey=id&blobnocache=true&blobwhere=1175818463699&blobheader=applicatio
n%2Fpdf&blobheadername2=Content-Length&blobheadername1=Content-
Disposition&blobheadervalue2=15801&blobheadervalue1=filename
%3D53573.pdf&blobcol=urldata&blobtable=MungoBlobs
Fasb.org. (2020). Retrieved 15 March 2020, from https://www.fasb.org/cs/BlobServer?
blobkey=id&blobnocache=true&blobwhere=1175818463588&blobheader=applicatio
n%2Fpdf&blobheadername2=Content-Length&blobheadername1=Content-

10INTERMEDIATE ACCOUNTING
Disposition&blobheadervalue2=36811&blobheadervalue1=filename
%3D53569.pdf&blobcol=urldata&blobtable=MungoBlobs
Ferretti, V. (2016). From stakeholders analysis to cognitive mapping and Multi-Attribute
Value Theory: An integrated approach for policy support. European Journal of
Operational Research, 253(2), 524-541.
Orrell, M., & Tian-Lee, J. (2012). Accounting Roundup.
Proposed Accounting Standards Update—Inventory (Topic 330): Disclosure Framework—
Changes to the Disclosure Requirements for Inventory. (2020). Fasb.org. Retrieved 15
March 2020, from https://www.fasb.org/jsp/FASB/Document_C/DocumentPage?
cid=1176168748657&acceptedDisclaimer=true
Proposed ASU—Income Taxes (Topic 740) Disclosure Framework—Changes to the
Disclosure Requirements for Income Taxes. (2020). Fasb.org. Retrieved 15 March
2020, from https://www.fasb.org/jsp/FASB/Document_C/DocumentPage?
cid=1176168335332&acceptedDisclaimer=true