Full Disclosure in Accounting

Paper Summary:

This paper discusses the accounting principle of full disclosure and explains that it calls for the financial reporting of significant facts affecting the judgment of an informed reader or stakeholder. The paper also discusses the companies who failed to properly disclose important company financial information on their financial statements, such as Enron and Xerox. In addition, the paper talks about the Sarbanes-Oxley Act that has caused the full disclosure principle to become mandatory within the corporate world.

Outline:
Substantial Increase in Importance
Approval of the Sarbanes-Oxley Act
Consequences of Failing to Fully Disclose Financial Information

From the Paper:

"Full disclosure in accounting has become very important after the debacles of big American companies who misinterpret financial statements, which has disrupted the trust of people in regard to proper practices of organizational full disclosure and accounting principles (Elliott, 2003). After the Enron fiasco, Corporate America has undergone another devastating setback by Xerox. The amounts involved in the scam are worth billions of dollars exhausting small savers and throwing out employees by the thousands. The whole burden of the Xerox epidemic has been seemingly placed on the accountability of the accounting profession, particularly the auditing function and treacherous executive practices. It is a stern accusation on the accounting profession as a whole."

Sample of Sources Used:

• University library Electronic Reserve Readings (ERR) (2001). Retrieved from University of Phoenix Library on October 1, 2006.
• Keiso, D. E., Weygandt, J. J., & Warfield, T. D. (2007). Intermediate Accounting, 12th Edition. New Jersey: John Wiley & Sons, Inc..
• Elliott, R. K. 2003. Unique audit methods: Peat Marwick International. AUDITING: A Journal of Practice & Theory 2 (2): 1-12.
• Securities and Exchange Commission (SEC). 2003. Materiality. SEC Staff Accounting Bulletin No. 103. Washington, D.C.: Government Printing Office.
• Victor, J. R. 2002. The expectation of accounting errors in medium-sized manufacturing firms. Advances in Accounting 2: 199-245.

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