Full Disclosure Paper
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- Date Submitted: 09/30/2011 11:14 PM
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Full Disclosure Paper
Full Disclosure Paper
Without honest reporting, the financial market will not function properly. Users of financial statements need to have an understanding of aspects included in financial reporting. “The full disclosure principle calls for financial reporting of any financial facts significant enough to influence the judgment of an informed reader,” (Kieso, Weygandt, & Warfield, 2007, p. 1282). Any information that would affect the reader’s understanding of the financial reports should be included. Some of what is included is based on judgment, so the normal protocol is to include information about events that have a material impact on the financial health of the company. In this paper the subjects to address are the needs for full disclosure and the changes that have been made to full disclosure in the past 10 years. In this paper another subject to address is the consequences that may occur when failing to meet full disclosure guidelines.
Need for Full Disclosure
As a result of companies like Enron, WorldCom, and Tyco, the disclosure rules have become more extensive. Investors need to be protected and corporations need to be held responsible for financial reporting. Corporate scandals and fraudulent or skewed financial reporting created the need for full disclosure. The Sarbanes-Oxley act governs the accounting acts of companies and requires full disclosure in financial reporting.
Changes in Last 10 Years
The business environment is growing more complex, there is a greater need for timely information, and accounting has become a control and monitoring device, which has made the requirements for disclosure to increase in the past 10 years, (Kieso, Weygandt, & Warfield, 2007). As a result, reports have gotten longer and more time consuming to create.
Notes to financial statements have become more extensive with the information included. The information needs to be current and predict future performance...
Full Disclosure Paper
Without honest reporting, the financial market will not function properly. Users of financial statements need to have an understanding of aspects included in financial reporting. “The full disclosure principle calls for financial reporting of any financial facts significant enough to influence the judgment of an informed reader,” (Kieso, Weygandt, & Warfield, 2007, p. 1282). Any information that would affect the reader’s understanding of the financial reports should be included. Some of what is included is based on judgment, so the normal protocol is to include information about events that have a material impact on the financial health of the company. In this paper the subjects to address are the needs for full disclosure and the changes that have been made to full disclosure in the past 10 years. In this paper another subject to address is the consequences that may occur when failing to meet full disclosure guidelines.
Need for Full Disclosure
As a result of companies like Enron, WorldCom, and Tyco, the disclosure rules have become more extensive. Investors need to be protected and corporations need to be held responsible for financial reporting. Corporate scandals and fraudulent or skewed financial reporting created the need for full disclosure. The Sarbanes-Oxley act governs the accounting acts of companies and requires full disclosure in financial reporting.
Changes in Last 10 Years
The business environment is growing more complex, there is a greater need for timely information, and accounting has become a control and monitoring device, which has made the requirements for disclosure to increase in the past 10 years, (Kieso, Weygandt, & Warfield, 2007). As a result, reports have gotten longer and more time consuming to create.
Notes to financial statements have become more extensive with the information included. The information needs to be current and predict future performance...