Question

process in financial accounting standard setting? 23. What is due process in financial ies, even those with "bad news," have an incentive to disclose 4 Why do companies, even those with "bad news." have financial reporting information? Does the ability to swiftly-and at no cost-download music files convert this music from a private good to a public good?

Answer 1

23. A high-level overview of the standards-setting process as established by the Rules of Procedure follows. The nature and extent of the Board's specific research and outreach activities will vary from project to project, depending on the nature and scope of the reporting issues involved.
The Board identifies financial reporting issues based on requests/recommendations from stakeholders or through other means.
The FASB decides whether to add a project to the technical agenda based on a staff-prepared analysis of the issues.
The Board deliberates at one or more public meetings the various reporting issues identified and analyzed by the staff.
The Board issues an Exposure Draft to solicit broad stakeholder input. (In some projects, the Board may issue a Discussion Paper to obtain input in the early stages of a project.)
The Board holds a public roundtable meeting on the Exposure Draft, if necessary.
The staff analyzes comment letters, public roundtable discussion, and all other information obtained through due process activities. The Board redeliberates the proposed provisions, carefully considering the stakeholder input received, at one or more public meetings.
The Board issues an Accounting Standards Update describing amendments to the Accounting Standards Codification.

24.

Public Relations Perspective
Disclosure can significantly enhance a business’s public image, which is why the Public Relations Society of America incorporates disclosure in its official code of ethics. Taking a stand and committing to honesty, accuracy and transparency in all business communications can be a disadvantage, however, if the business or its employees do something that could damage its reputation. Ethics and finances have to be considered. In many cases, the business owner has to decide if protecting the business’s long-term reputation is more important than any short-term financial benefits that going public might bring it.

Business Competition Considerations
Disclosing business and financial information can be a way to keep the public informed, increase consumer confidence about the financial health of the business and generate excitement about future plans. However, it can also put the business at a significant competitive disadvantage. Although a business can alter the type of information and level of detail and use information timing to mitigate potentially damaging effects, the question is whether the information released will have the intended effect. The more significant the potential competitive disadvantage, the greater the need for a business to keep information private for a longer time.

Disclosure-Related Expenses
A small business must balance the financial cost of disclosure against its advantages. A main disadvantage -- especially of disclosing financial information -- is that full disclosure requires a business to comply with generally accepted accounting principles, or GAAP. This significantly increases annual reporting requirements and adds the costs of gathering, processing and auditing financial information. Don Whalen, director of research for Audit Analytics, reports that external audit costs are starting to increase. According to Whalen, companies paid an average of $472 in audit services for every $1 million in revenue in 2012, compared with $476 per million in 2011. For small businesses especially, full disclosure may be limited by the size of the business’s annual budget.

Cost of Doing Business
A business committed to full disclosure can find the cost of raising capital to expand the business less expensive. Full disclosure and the transparency it provides allows lenders and other potential creditors to better assess the business as a financial risk. The lender, the amount requested and borrowing objectives may make full disclosure -- including submitting the results of an external audit -- a must for some businesses. With a short-term loan or vendor credit, the degree of disclosure will affect the interest rate charged. In either case, the business will have to determine whether the advantages of meeting growth or purchasing objectives are worth the cost involved in fully or partially disclosing financial information.

25. Yes the ability to swiftly and at no cost download music files convert this music from private good to public good.