Full Disclosure/Financial Disclosure

Question 1

What is Full Disclosure?

Answer 1

Required by SEC for publicly traded companies.

Instill confidence in investors that the marketplace is efficient and transparent.

Need in business transactions for both parties to tell the whole truth about any material issue pertaining to a transaction.

Question 2

What is Financial Disclosure?

Answer 2

Any required information that must be disclosed in financial statements or related footnotes.

Question 3

Problem With Full/Financial Disclosure

Answer 3

The amount

How much is too much?

Not just what is available or nice to add, but what is useful.

Question 4

Suggestion for Change: Two Tier Disclosure

Answer 4

Tier 1 (UK is currently using): Mail out the annual report with decision-critical information and auditor’s report to all shareholders.

Tier 2: full disclosure info. Only available upon request to cut down on time, money, and resources used.

Question 5

Technology: Good and Bad

Answer 5

Good: reports can be made available on-line so those who want to read the entire thing can. Also cuts down on cost of printing and mailing.

Bad: Since it’s on-line, it’s easier to publish even more information which is just adding to “disclosure overload”

Question 6

Disclosure Overload

Answer 6

Redundancies in requirements of regulators like SEC, banks, FASB, and AICPA not being the same.

Regulators keep piling on more requirements with out cancelling or consolidating with other requirements.

More useful information is obscured by less useful information.

Different kinds of info are needed for the different sophistication levels of the various users of financial statement.