Chapter 16 Disclosure Define disclosure and describe its

Chapter 16 Disclosure • Define disclosure and describe its role. • Answer the four questions about disclosure. • Describe the FASB Business Reporting Research Project. • Consider disclosure after Enron.

Disclosure • Defined • Vs. Accounting • New Importance

Disclosure Questions • Four questions – 1 for whom – 2 why – 3 how much – 4 When

Disclosure Levels • General Levels – adequate – fair – full • SEC levels – 1 protective – 2 informative – 3 varying • 1 b 4; now 2; 3 in future

Disclosure Considerations • • Two Considerations: Cost/benefit ? Information Overload Summary Annual Reports – 1983 FEI – 1986 GM – UK

Jenkins Committee • AICPA 1991 • Issue: relevance of financial reporting (fr) • Concerns: changes in business; fr lagging • Approach: literature, users, Harris poll, preparers. • Recommendations: extend model • Concerns

Disclosure Proposals • Wallman Proposal • FASB BRRP (excuse me!)

Evaluations of Disclosure • Chronology – Balance Sheet tilt – Reporting in the 1990 s – Broken U. S. Model – Information overload – Large Investors – AIMR Survey

Online Financial Reporting • BRRP Topic • Best practices today

Disclosure Barriers • Barriers – Too costly – Aid competition – Aid unions – Confuse – Other sources – Not know needs