Exposure Draft

Exposure Draft§

Definition§

An Exposure Draft is a preliminary version of a proposed new or revised financial reporting standard issued by a standard-setting body, such as the Financial Reporting Council (FRC), for public comment and discussion before the final standard is published.

Purpose§

The primary purpose of an exposure draft is to solicit feedback from stakeholders including accountants, auditors, regulators, and the public. This process ensures that the proposed standards are thoroughly vetted, feasible for implementation, and considerate of the practical implications for businesses and markets.

Examples§

1. IFRS Exposure Drafts: The International Financial Reporting Standards (IFRS) Foundation often issues exposure drafts for new standards or amendments to existing standards. They seek input on the aspects that might need rethinking or improvement before finalizing the standards.

2. FASB Exposure Drafts: The Financial Accounting Standards Board (FASB) issues exposure drafts when proposing changes to the Generally Accepted Accounting Principles (GAAP) in the United States.

3. ASB Exposure Drafts: The Auditing Standards Board (ASB) may issue exposure drafts prior to revising or creating new auditing standards.

Frequently Asked Questions (FAQs)§

What role does public comment play in the exposure draft process?§

Public comment is crucial as it ensures that a broad range of perspectives and potential impacts are considered before finalizing the standards. This feedback can lead to significant revisions that enhance the standard’s applicability and acceptability.

How long is the public comment period for an exposure draft?§

The comment period typically ranges from 60 to 180 days, depending on the complexity of the draft and the urgency of the standard-setting body.

Who can provide feedback on an exposure draft?§

Feedback is typically welcomed from all interested parties, including professionals in accounting and finance, businesses, investors, academics, and other stakeholders.

Related Terms§

• Financial Reporting Council (FRC): An independent regulator responsible for promoting high-quality corporate governance and financial reporting in the UK.

• Financial Reporting Standard (FRS): Standards issued by accounting standard setters that prescribe how financial statements should be prepared and presented.

• Generally Accepted Accounting Principles (GAAP): A common set of accounting principles, standards, and procedures that companies use to compile their financial statements.

• International Financial Reporting Standards (IFRS): Standards developed by the International Accounting Standards Board (IASB) that provide a global framework for how public companies prepare and disclose their financial statements.

Online Resources§

• Financial Reporting Council
• International Financial Reporting Standards (IFRS) Foundation
• Financial Accounting Standards Board (FASB)
• Public Company Accounting Oversight Board (PCAOB)

Suggested Books for Further Studies§

• “Wiley IFRS 2022: Interpretation and Application of International Financial Reporting Standards” by PKF International Ltd
• “Accounting Standards: A Comprehensive Question Book for the CPA Exam” by Patrick R Delaney
• “GAAP 2022: Interpretation and Application of Generally Accepted Accounting Principles” by Joanne M. Flood
• “Financial Reporting and Analysis: Using Financial Accounting Information” by Charles H. Gibson

Accounting Basics: “Exposure Draft” Fundamentals Quiz§

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