FASB proposes changes to discontinued operations reporting requirements
April 10, 2013
Last week, the Financial Accounting and Standards Board (FASB) released a proposal to reform financial reporting standards related to discontinued operations for public and private companies as well as nonprofit organizations.
The FASB is currently awaiting comments and suggestions from regulators and other stakeholders through August 30. The proposed changes would require entities to provide more information about discontinued operating, investing and financing cash flow endeavors and related fixed asset disposal.
"Investors have raised concerns that for certain industries too many disposals of assets qualify for discontinued operations presentation under current standards, resulting in financial statements that are less relevant and more costly to prepare," stated Leslie Seidman, FASB chairman. "The board is seeking stakeholder input on changes intended to capture only those disposals that represent major strategic shifts as discontinued operations and to provide enhanced disclosures about the financial effects of discontinued operations and other disposals of significant components of an organization."
According to the organization's station, the proposal would require entities disclose more about their continued involvement in such operations by compiling the information into the same documents reporting the business' or nonprofit's net income. In addition, the FASB aims to align U.S. practices with those of the International Financial Reporting Standards.