The International Auditing and Assurance
Standards Board (IAASB) has found that today’s financial reporting
frameworks do not adequately articulate the role and objective of
disclosures in the financial statements and the criteria for
including them.

The IAASB said applying materiality to
disclosures, evaluating misstatements, the availability of audit
evidence and work effort are some of the biggest challenges faced
by the entire financial reporting supply chain.

The IAASB findings based on a discussion
paper, The Evolving Nature of Financial Reporting: Disclosure
and Its Audit Implications
, also found more auditing guidance
is required in certain areas indentified.

IAASB chairman Arnold Schilder said
disclosures have always been a critical component of financial

“But it has become more so today as reporting
increasingly incorporates fair value information, estimates
involving judgment and complex measurements and narrative
disclosures of some of the risks and characteristics of companies
and groups,” he said.

The report also found there is a need for the
IAASB to further engage with the International Accounting Standards
Board and its US counterpart, the Financial Accounting Standards
Board, in order to explore collaborative solutions to many of the
key disclosure issues.

The IAASB based its feedback report on 51
responses from financial reporting participant groups around the