Financial Expert Responses to Note Disclosure Practices under IFRS Requirements: Evidence from Early Adopters of IFRS in Korea

IFRS’s (International Financial Reporting Standards) require- ments for extensive note disclosure have been recognized as possibly posing a significant challenge for the auditors and users, as welll as the preparers, of the financial statements prepared according to IFRS. Concerns have been raised as to whether the costs to fulfill these requirements pay off, including their possibly producing disclosure overload. This paper investigates the views of financial experts (users, preparers and auditors of financial statements) on whether firms properly identify and understand voluminous note disclosure contents and provide information in the relevant form and substance. It examines note disclosure practices as reported in the K-IFRS financial statements (prepared in accordance with IFRS adopted in Korea) and conducts a survey of financial experts’ opinions about the adequacy focusing on the sufficiency and usefulness of the note disclosure in the K-IFRS financial statements. The survey results revealed that the concerns about overload of the IFRS disclosure requirements seem to be exaggerated and anecdotal, but that there is a need to improve some disclosure requirements related to the case disclosures. A majority of the respondents preferred clear and condensed presentation of necessary information without a simple collection of too many detailed items and wanted proper separation of figures and assumptions based on their function for better understanding or analyses.