Firms and regulators care not just about the information made publicly available to investors, but the form in which the information is revealed to the investors. The firms and regulators have a general concern about how the information should be reported has earnings or as a footnote on the financial statements. The full disclosure principle is a helpful tool to establish how the financial information is reported on the financial statement. This paper will discuss the full disclosure principle and the information necessary to disclosure on the financial statements. The paper will converse about the changes to full disclosure principle and the consequences for disclosure of fraudulent information.
What is the full disclosure principle in accounting reporting? According to the textbook Intermediate Accounting, “The full disclosure principle calls for financial reporting of any financial facts significant enough to influence the judgment of an informed reader,” (Intermediate, 2007). The full disclosure principle purposes are provide honest and ethical conduct, provide full, fair and accurate financial statements and disclosures, compliance and accountability under the fill disclosure principle. The principle must be applied to by all executive and financials officers with good faith and reasonable business judgment.
The SEC and the Financial Accounting Standards Board has developed the full disclosure principle as a guideline to help determine the appropriate information to be reported on the financial statements. The financial information, which needs to disclosure under the principle, is information that might affect the outcome of the financials statements. According the Federal Accounting Standards Board website, the following are examples of disclosures under the full disclosure principle:
Loss from the impairment of a property, plant, and equipment, intangible assets, other assets, and the reversal of such an impairment loss. 2.
Any reversals of...
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