24-4
5. Identify the major disclosures in the
auditor’s report.
6. Understand management’s
responsibilities for financials.
7. Identify issues related to financial
forecasts and projections.
8. Describe the profession’s response to
fraudulent financial reporting.
After studying this chapter, you should be able to:
LEARNING OBJECTIVES
1. Review the full disclosure principle
and describe implementation problems.
2. Explain the use of notes in financial
statement preparation.
3. Discuss the disclosure requirements for
related-party transactions, subsequent events, and major business segments.
4. Describe the accounting problems
associated with interim reporting.
24
24-5
Full disclosure principle
calls for financial reporting of any financial facts significant enough to influence the judgment of
an informed reader.
Financial disasters at Mahindra Satyam
IND and Société
Générale FRA highlight the difficulty of implementing the full
disclosure principle.
LO 1
24-6 ILLUSTRATION 24-1
Types of Financial Information
LO 1
24-7
Increase in Reporting Requirements
Reasons:
Complexity of the business environment.
Necessity for timely information.
Accounting as a control and monitoring device.
LO 1
24-8
Differential Disclosure
LO 1
IASB has developed IFRS for small- and medium-sized entities SMEs. SMEs is less complex in a number of ways:
Topics not relevant for SMEs are omitted.
Allows fewer accounting policy choices.
Many principles for recognizing and measuring assets, liabilities, revenue, and expenses are simplified.
Significantly fewer disclosures are required.
Revisions to the IFRS for SMEs will be limited to once every three years.
24-9
5. Identify the major disclosures in the
auditor’s report.
6. Understand management’s
responsibilities for financials.
7. Identify issues related to financial
forecasts and projections.
8. Describe the profession’s response to
fraudulent financial reporting.
After studying this chapter, you should be able to:
LEARNING OBJECTIVES
1. Review the full disclosure principle and
describe implementation problems.
2. Explain the use of notes in financial
statement preparation.
3. Discuss the disclosure requirements for
related-party transactions, subsequent events, and major business segments.
4. Describe the accounting problems
associated with interim reporting.
24
24-10
LO 2
Notes are the means of amplifying or explaining the items presented in the main body of the statements.
Accounting Policies
Companies should present a statement identifying the accounting policies adopted Summary of Significant Accounting Policies.
In addition, companies must:
1.
Identify judgments made in the process of applying the accounting policies.
2.
Disclose information about assumptions made.
24-11
Common Notes
Inventory
Property, Plant, and Equipment
Creditor Claims
Equityholders’ Claims
Contingencies and Commitments
Fair Values
Deferred Taxes, Pensions, and Leases
Changes in Accounting Principles
LO 2
MAJOR DISCLOSURES
24-12
5. Identify the major disclosures in the
auditor’s report.
6. Understand management’s
responsibilities for financials.
7. Identify issues related to financial
forecasts and projections.
8. Describe the profession’s response to
fraudulent financial reporting.
After studying this chapter, you should be able to:
LEARNING OBJECTIVES
1. Review the full disclosure principle and
describe implementation problems.
2. Explain the use of notes in financial
statement preparation.
3. Discuss the disclosure requirements
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