Full Disclosure

Full Disclosure

As outlined by the Financial Accounting Standards Board (FASB), requirements for full disclosure on financial statements have increased over the years. These full disclosure requirements are defined by the principle that calls for financial reporting on any financial facts significant enough to influence the judgment of an informed reader. An analysis of the main characteristics for full disclosure principles such as objective, usefulness and effects over time should be reviewed. In addition, the full disclosure principle should be expressed in the financial statements, notes to the financial statements and supplementary information. These last two sentences seem to be the thesis of the paper, and if so, it is a good thesis.

According to FASB Concepts Statement No. 1, the objectives of disclosure in financial reporting begin with a broad focus on information that is useful in investment and credit decisions; then narrow that focus to investors' and creditors' primary interest in the prospects of receiving cash from their investments in or loans to business enterprises and the relation of those prospects to the enterprise's prospects; and finally focus on information about an enterprise's economic resources, the claims to those resources, and changes in them, including measures of the enterprise's performance, that is useful in assessing the enterprise's cash flow prospects. The reasons for focusing the objectives of

financial reporting primarily on investment, credit, and similar decisions are that their decisions and their uses of information have been studied and described to a much greater extent than those of other external groups, and their decisions significantly affect the allocation of resources in the economy. In addition, information provided to meet investors' and creditors' needs is likely to be generally useful to members of other groups who are interested in essentially the same financial aspects of business enterprises as...

Similar Essays