Full Disclosure Financial Reporting Paper

Running Heading: Full disclosure financial reporting

Full disclosure financial reporting

Mary Miller

ACC/421 Intermediate Financial Accounting 1

University of Phoenix

Cathy Reed

October 8, 2012

Full disclosure principle in accounting

The full disclosure principle in accounting is the action of revealing or reporting every detail of economic transactions, which can affect the financial position of the business and other people who use the financial statements, such as investor, creditors, etc. (What is the full disclosure principle? web -site).

Why has disclosure increased substantially in the last ten years?

During the last ten years, the full disclosure increase substantially because the FASB has issued several substantial disclosure provisions, such as Complexity of the Business Environment, Necessity for Timely Information, Accounting as a Control and Monitoring Device with the purpose to protect investors and the public security.

Need for full disclosure in financial reporting

Full disclosure in financial reporting is necessary because this report reflects the financial activities of the business, if this report is not accurate, and if information omitted or altered affects the decisions of the person using or reading the reports. The government created the SEC and FASB; these two organizations set guidelines to ensure that companies and business disclose the information required by the law. A full disclosure of a financial report (cash flows, income, expenses, and investments) need to be precise, well detailed, and accurately disclosed because it helps investors, lenders, stakeholders, and managers among other users trust these financial statements to make financial decisions regarding the business. The full disclosure of the financial reporting is important also for the expansion of international markets. People need to trust and feel confident and comfortable to invest

Possible consequences of...