The Financial Accounting Standards Board expects to issue a discussion document this year outlining some new ideas about how to establish disclosure requirements and, the board hopes, how to whittle away at current disclosures that are unnecessary.

“The project is about the ultimate objective, which is to improve the disclosures in the notes to financial statements,” said Ron Lott, project manager at FASB. Improving them involves a number of things, he says, such as adding information that might be missing, making it easier to understand what's there, and eliminating things that aren't really interesting to people using financial statements. “We've heard about disclosure overload, and some have this expectation that we will get rid of a lot of disclosures” he says. “That isn't what we are going into this project to do, but we hope to have fewer disclosures that aren't helpful.”

Officially, FASB is targeting “mid-2012” to issue a discussion document, but Lott says the timeline is fairly fluid. “We will have it out sometime during this year, hopefully during the middle of this year,” he says.

The discussion document will address a couple of different issues, says Lott. First, the board is developing a framework that it would follow when faced with decisions about new disclosure requirements. “In a perfect world, the board would have had a disclosure framework before it ever developed a disclosure requirement, but we don't have it,” he says. “So we're starting with a decision process for the board to use in any standards project.”

When it is issued, the discussion document will explain the framework it is developing and ask for comments on whether it likely will lead the board to sound disclosure decisions in the future. The board has developed a working framework and is testing it against existing disclosure requirements to see if it would lead to different decision. So far, says Lott, the board isn't finding significant differences, but he emphasizes the framework is still in test-drive mode.

Another element to the discussion document, says Lott, would be some kind of proposed model for reporting entities to follow to reach decisions of their own about whether certain disclosures would be necessary or advisable. “We are not sure what form this is going to come out exactly,” says Lott. The board is hoping it ultimately will develop disclosure requirements that give entities more flexibility to decide for themselves when disclosure is appropriate, so a model or tool for entities to follow would map out some ideas on how to reach those judgments. Finally, the board hopes the discussion document will give entities some ideas to consider about how to prioritize disclosures.

For companies hoping the project will simply instruct them to carve out entire chunks of their existing disclosure requirements, Lott can only temper the enthusiasm. “It is probably not going to be so definitive as to say ‘you can delete this disclosure,'” he says.