Exposure Draft - Explained
What is an Exposure Draft?
Written by J. Mance Gordon
Updated at April 19th, 2024
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What is an Exposure Draft?
An exposure draft is a document that the Financial Accounting Standards Board (FASB) uses to solicit comments or discussions from the public concerning a proposed accounting law or a pronouncement.
An exposure draft is not a final document. It is an arranged document meant for people to discuss, deliberate, make comment about. It is an intended review of an accounting standard before it is passed as a law. The exposure draft also serves as the opinion of the FASB on an accounting issue.
The exposure draft is used to reduce consequences that might result from an accounting review or pronouncement if comments and opinions from the public were not sought. FASB, however, considers comments from professionals in the accounting and finance industries or corporate organizations and industries who might be impacted by the review or who have sufficient knowledge about the issue to provide relevant feedback. This gives the FASB the opportunity to revise the exposure draft before it is standardized or made a mandatory Financial Accounting Standard (FAS).