Full Disclosure Research Paper

Full Disclosure The general practice of providing information that is of sufficient importance to influence the judgment and decisions of an informed user is often referred to as the full disclosure principle (Kieso, Weygandt, and Warfield, 2007). Full disclosure requires that financial statements and their notes present all information that is relevant to the users' understanding of the company's financial condition. In other words, the statements should offer any explanation that is needed to keep them from being misleading. Explanatory notes are considered an integral part of the financial statements. For instance, a change from one accounting procedure to another should be reported. In general, the form of the financial statements can affect their usefulness in making certain decisions. For example take
Failure to disclose these types of items can cause the financial statements to be misleading where the user is not getting the full picture. Furthermore failure to disclose certain items can cause a company to be investigated or sued. In comparison with full disclosure there are the cost and benefits. These costs and benefits hold that the benefits to be gained from providing accounting information should be greater than the cost of providing it. Most of the costs of providing information fall at first on the preparers; the benefits are reaped by both the preparers and users. Finally, both the costs and benefits are passed onto the public in the form of prices and social benefits from more efficient allocation of resources. The costs and benefits of a particular requirement for accounting disclosure are direct and indirect, immediate and