Describe the Strengths and Weaknesses of the Proposed Statement Formats

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As I reviewed the exposure draft of proposed accounting standards updates regarding comparative financial statements, I came to the conclusion that there are more strengths than weaknesses in this new format. The first section, page 111, BC235, took me by surprise. This is requiring all businesses to “adopt the financial statement presentation on a full retrospective basis.” This provision would require all businesses to redo financial statements, from prior periods, into the new, proposed, format. This is a huge weakness. Changing the formatting and organization of financial reports is a big undertaking for most businesses, but to require businesses to redo many years of financial data into a new format would be a great cost and a source of great frustration for companies. As I reviewed the format of example 1 on page 115, at first glance I was opposed to this change. The format was unfamiliar and difficult for me to read since I am accustomed to separate income, balance sheet and cash flow reports. But once I took my time to read the detail captions, I see how this format could make reading financial statements easier. I found the flow from assets/liabilities to income/expenses and finally ending with cash flows a better system than using three reports to review separately. The flow resembles an excel spreadsheet. I found the formatting, and the categories carry through to all three statement headings strength. This format allows the reader to understand what assets a company holds, how they were obtained from the income statement and how they were used in the cash flow section. I also found the division between operating, financing and investing, and closing with equity a rational division of financial categories. Example 3 & 4 seem to follow current reporting structure, so would consider this strength due to familiarity. The format for

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