Exposure Draft – Definition & Explanation

Cite this article as:"Exposure Draft – Definition & Explanation," in The Business Professor, updated March 7, 2020, last accessed October 19, 2020, https://thebusinessprofessor.com/lesson/exposure-draft-definition/.


Exposure Draft Definition

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.

A Little More on What is an Exposure Draft

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.

Even More Explanation of an Exposure Draft

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).

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