Purpose of Disclosure in Financial Reports

Purpose of Disclosure in Financial Reports

1. Changes in Accounting Policy

   • Reporting entities are required to include notes with their financial reports. The notes explain changes in accounting policies, such as the application of recognition criteria.

2. Comparability and Understandability

   • Compliance with IASB 8 ensures compatibility of reports
   • Complex accounting information which is relevant to users’ decision making must be disclosed in the reports

3. Disclosure is the principle that businesses should reveal in their published reports all information needed for users to make informed decisions

4. If in doubt, DISCLOSE

5. If you are not consistent, disclose all facts and effect on income