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An exposure draft is a preliminary version of a public statement that is released for comment before being revised and republished as an official statement. The Financial Accounting Standards Board often uses exposure drafts to set new standards for accounting practices, and public comments are evaluated and considered before finalization. The FASB offers options for commenting on proposed text on their website.
An exposure draft is a draft version of a public pronouncement that is released to the public for comment. After a comment period has expired, the document is revised in accordance with the comments and then republished as an official pronouncement. The term “exposure draft” is often used specifically in reference to such documents published by the Financial Accounting Standards Board (FASB) in the United States.
When an exposure draft is developed, the issuing organization identifies an issue and works with its members to write a coherent, clear, and effective statement on the issue. The statement includes a proposal to address the problem, a discussion of how the proposed action will be implemented, and when the proposal will take effect. In the FASB example, such documents are used to set new standards for accounting practices.
By first releasing a draft version to the public, organizations have the opportunity to hear from people who may have an opinion on it. They can also take advantage of input from different perspectives that may not have been considered in the original draft. Public comment can also provide an opportunity to identify weaknesses in the exposure draft that need to be removed in the final version that will be released to the public.
Public comments in response to exposure drafts are evaluated and considered by the organization writing the proposal, which develops new drafts and refines the language until it is considered ready for finalization. The final statement is published after the comment period closes and becomes part of the organization’s official collection of pronouncements. When organizations do things like set industry standards, members of the public tend to pay close attention to their exposure drafts because they can indicate answers to current problems and provide insight into the future direction of the industry.
The FASB is a seven-member board of professional accountants that sets standards for financial reporting and accounting practices. His public pronouncements on topics related to accounting and the financial industry vary widely in scope and are designed to address a variety of topics. When the FASB issues an exposure draft, it offers a number of options for people who want to comment on the proposed text. Information on current exposure drafts can be found on the FASB’s website along with options for submitting comments to the organization, for members of the public interested in doing so.
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