Question

Analyze and explain the requirements for full disclosure in financial reporting. Explain why full disclosure is important in financial reporting.

Answer 1

Solution. An organization is entrusted with various rules and regulations of operating business activities and also appropriate disclosure and monitor of such reports in order to sustain. The full disclosure in financial reporting accounts for including all the necessary data and information of organization's financial transaction activities in order to facilitate smooth interpretation of its reporting by externals who owns considerable interest in its operation and provides basis for interpretation of its true financial position in competitive economic business market.

It plays an important role in organization's financial reporting system as it provides description of encumbered assets, goodwill impairment, tax position, and other information details as footnotes of methods and policies adopted in measurement according to US GAAP which generates and attracts both present and potential investors and approves society requirements as resources are limited and organization has to adopt CSR in order to gain advantage of opportunities over competitor's.