The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) are in the midst of a joint project on financial statement presentation to establish a common standard to improve how information is organized and presented in the financial statements. In an unprecedented approach, the staffs of the IASB and the FASB recently released a staff draft of an exposure draft that reflects the boards’ cumulative tentative decisions on financial statement presentation as of April 2010. The summary and the proposals included in the staff draft have been made publicly available only for information as a basis for outreach activities. Those activities will focus primarily on two areas: (a) the perceived benefits and costs of the proposals, and (b) the implications of the proposals for financial reporting by financial services entities.

The overriding objective of the joint financial statement presentation project is to make financial statements more relevant to users of the financial statements. The core principles embodied by the FASB and IASB in this project are to: (a) portray a cohesive financial picture of an entity's activities, and (b) disaggregate information so it can be used in predicting an entity's cash flows. The cohesive principle is primarily achieved through a common organizational structure across the financial statements. The Statement of Financial Position, Statement of Comprehensive Income, and Statement of Cash Flows will each have Business and Financing sections. The Business section will be categorized between operating and investing balances or activities. The Financing section will be categorized between debt and equity balances or activities. In addition, there will be separate sections for Discontinued Operations and Income Taxes on each of these statements. The further disaggregation principle will be primarily achieved by requiring balances and results to be broken out into material classes of similar items. These classes may be based on function, nature, and/or measurement basis.

A number of key decisions have been tentatively reached by the FASB and IASB in this joint project. Many of these decisions illustrate how the core principles of the project have been integrated into the fiber of the financial statements. Other decisions represent key changes to historical requirements or practices. Included below is a very brief summary of a few of these tentative decisions:

• Complete set of financial statements" In addition to the Statement of Financial Position, Statement of Comprehensive Income, and Statement of Cash Flows, an entity's financial statements would also include a Statement of Changes in Equity and footnotes.
• Consistent categorization between financial statements: Where an entity categorizes a balance on the Statement of Financial Position will drive where the related activity is categorized on the Statement of Comprehensive Income and Statement of Cash Flows. In other words, if an account is categorized as operating on the Statement of Financial Position, the activity related to that account balance would also be shown as operating on the Statement of Comprehensive Income and Statement of Cash Flows.
• Extraordinary items: An entity will no longer be required (or allowed) to classify gains and losses as extraordinary on the Statement of Comprehensive Income.
• Unusual or infrequently occurring events: An entity will be required to separately present on the Statement of Comprehensive Income amounts related to events that are either unusual or occur infrequently. An entity will not be able to label these amounts as extraordinary. In addition, an entity will be required to provide disclosures about these amounts and events.
• Cash flows from operating activities: While an entity will be required to use the direct method to determine cash flows from operating activities on the Statement of Cash Flows, it also will have to reconcile operating income to operating cash flows on the face of that statement. In addition, an entity will be required to provide information about noncash transactions on the face of the Statement of Cash Flows.

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