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An accounting disclosure is a statement released by a company, business, or corporation that identifies the financial strategies that are being used and reveals things like costs and profits for a certain calendar period. The main purpose of this sort of document is to inform both current and potential investors of the accounting strategies and methods used. These financial statements include, but are not limited to, the balance sheet, the statement of cash flows, the income statement, and the statement of stockholders’ equity. The full disclosure principle of most legal systems requires that any event that would have an impact on the financial statements should be revealed, and the laws of many countries set out specific guidelines for both how and when disclosures need to be made. Companies often release this sort of information in their annual reports, but there are a number of acceptable publication methods in most places
Very well explained by Venkitaraman and Georgei. In short it is mandatory by Law and regulators to have a standard set of certain disclosures to keep informed all its shareholders and stakeholders about the company.
Discolours are requirement from IFRSs, and IASs to maintain the transparency and standardised reporting format which can easily be compared to the similar companies in same industry, and give the reader enhanced understanding of company's financial position and financial performance.
Disclosure can be divided into several types according to certain foundations have these bases are as follows:
First: classification disclosure to protect the community and educate them:
Disclosure can be divided according to this basis into two types:
A preventive disclosure:
And is known as the traditional disclosure is intended to protect investors and creditors and other users of accounting information to make inappropriate decisions.
The information should be in accordance with this disclosure at the highest possible degree of objectivity.
Requires disclosure of preventive detection of the following:
Accounting policies.
Changes in accounting policies.
Debugging.
Gains and potential losses.
Financial commitments.
Subsequent events.
(B) Disclosure educational:
The media knows that this disclosure has emerged as a result of increased disclosure appropriate importance as one of the main characteristics of the quality of accounting information.
It provides educational disclosure outweigh the amount of information available information on preventive disclosure but with some abandon objectivity in order to achieve appropriate.
Examples of educational disclosure, disclosure of the impact of changes in the price level, preparing progress reports, sectoral reporting, disclosure of financial forecasts.
Second, disclosure and classification according to the amount of information:
Disclosure can be classified according to the amount of information into several types:
A sufficient disclosure:
This represents the minimum disclosure of the information to be shown and represents a preventive disclosure is adequate disclosure is mandatory through the application of accounting standards.
(B) the fair disclosure:
This means disclosure outweigh the information contained in accordance with the disclosure of sufficient information and cares of this disclosure balanced care of the needs of all parties used accounting information.
(C) full disclosure:
This means the disclosure of comprehensive information and therefore the information details so that lead to confusion accounting information users might be.
Disclosure depends on the cost and benefit analysis type.
The relative importance in interpreting the scope of disclosure:12/05/1429 H Saturday
Means the relative importance that if the bug to exclude or delete accounting information from the financial statements, they are misleading and are guided by the relative importance by the following:
A quantitative considerations where they are to determine the percentage or a certain number to identify the relative importance of it is determined by the proportion of10% of the basis for determining the relative importance.
(B) qualitative considerations which may be the item or the item does not achieve quantitative considerations, but it is of relative importance example (of compensation may not exceed1% of total expenses, but significant and, therefore, included in the financial statements.
Standard Presentation and Disclosure:
Was to issue a statement of accounting concepts and objectives of the Ministry of Commerce in1404 and includes his part in the last year, the standard supply and disclosure.
The standard addresses the general presentation and disclosure of each of the following:
Public display.
List all your offer.
Public disclosure.
First, the overall presentation:
1. The company must prepare the following financial statements:
A statement of financial position.
(B) the income statement.
(C) Statement of changes in shareholders' equity or a list of retained earnings (retained).
(D) the statement of cash flows.
In addition to the foregoing the need for a clarification Mtma financial statements.
2. Display and arrange financial statements as follows:
A statement of financial position.
(B) the income statement.
(C) Statement of changes in shareholders' equity or a list of retained earnings (retained).
(D) the statement of cash flows.
3. the general principles for the presentation and disclosure include rules apply when preparing all financial statements:
(A) The financial statements must be prepared properly so that it can absorb the information, through the aggregation of heterogeneous elements, as well as accounting figures rounded to the nearest Real
(B) the preparation of financial statements that are comparable even to take advantage of the information contained in the financial statements.
(C) must be given to each address list shows the contents of the legal and accounting unit and form name so little whether the contribution, partnership in addition to the time period covered by the financial company list.
(D) must be given the addresses of the Notes to the accompanying financial statements, so that explains all the contents of the address information, as these notes are numbered and referred to in the financial statements, and should be noted that the content of the words accompanying notes are considered an integral part of the financial statements.
Second: special offer all financial statement:
A presentation of information in the lists of financial position:14/05/1429 H Monday
1. You must balance sheet includes all of the assets and liabilities and the elements of property rights may not be offset between assets and liabilities only if there is a statute requires it.
2. highlights the assets at the heart of the balance sheet and in the following order:
• current assets.
• financial assets and investments.
• fixed assets.
• intangible assets.
3. highlights the opponents set in the heart of the balance sheet and in the following order:
• current liabilities.
• non-current liabilities.
4. highlights the property rights at the heart of the balance sheet and in the following order:
• paid-up capital.
• capital grants.
• reserves (Retained earnings customized).
• Retained earnings unallocated.
5. classified assets and liabilities into assets and current liabilities and assets and liabilities of non-current and includes cash in circulation and other assets that turn into cash within a year or period of operation of assets (normal operating cycle), whichever is longer.
6. highlights traded on the main groups in the balance sheet assets on the basis of the nature of each of them. For example, (cash, accounts receivable, notes receivable, inventory).
7. should highlight the non-current assets at the heart of the balance sheet in accordance with the general nature and included under the headings of the following:
• assets and financial investments.
• fixed assets.
• intangible assets.
8. The highlight is traded on the solid balance sheet total assets.
9. The highlight inter-traded solid balance sheet liabilities.
10. must subtract the assets of the assets that are related to the value of calendar allocations Examples include (Custom consumption, provision for doubtful debts).
11. must be current liabilities include amounts payable within a year or operating cycle, whichever is longer.
(B) the presentation of information in the statement of income:16/05/1429 H Wednesday
1. You must include the income statement income and expenses and the difference between them of profits or losses.
2. You must present the results of operations as follows:
• the results of continuing operations.
• Results of discontinued operations (intended activities stopped, including gains and losses on these activities is ongoing).
• gains and losses resulting from natural disasters and sunset forced to use the assets for reasons beyond the control of the company.
3. You must highlight the ongoing business results in separate parts in the income statement as follows:
• Business results of the main activities.
• incidental or subsidiary business results.
It is intended that the operations or activities of the main activities which are a major source of revenue.
It is intended sub-processes such operations carried out by the facility, but the main source does not represent for revenue (such as rents received by businesses or industrial profits of the sale of shares of businesses or industrial), or incidental operations represent the operations other than the main processes and sub-processes (such as sale fixed assets to a commercial company, selling scrap in construction companies).
4. You must show the following items at the heart of the income statement as part of the results of continuing operations and in the following order:
• Net sales.
• Cost of sales.
• Total profit / loss.
• operating expenses.
• Income from continuing operations president.
• gains or incidental operations or subsidiary losses.
• Income from continuing operations.
(C) the presentation of information in the statement of cash flows:
1. When should prepare a list of the financial position of the cash flows for the same period.
2. You must displays a list of net inflows of cash flows from operating activities and investing activities and financing activities.
(D) the presentation of information in the statement of changes in equity (shareholders):
1. You must clarify the statement of changes in equity and changes in each of the paid-up capital and capital grants and reserves (retained allocated) profits and retained earnings is allocated.
2. Display equity items as separate items so that the beginning of the period and the balance of additions and disposals appear to reach the end of the period the balance.
(E) the presentation of information in the list of retained earnings:
1. This list shows the changes in retained earnings, whether dedicated or non-dedicated.
2. This menu shows the various items allocated and unallocated earnings retained.
3. This menu shows the beginning of the period for each item and adjustments during the period.
really I agree with Mr.Venkitaraman , as I can't add any more words as he covered all the points , I mean he have Disclosure answer.
Financial Disclsures are usually a major requirement by the authorities in order to provide transparent information to share holders and stakeholders
I AGREE WITH MR VENKITARAMAN & MR GEORGI ANSWERS
The first answer is good enough to get the answer of your question. I would add, that all investors potential investors, shareholders and other users of financial statements have the right to get all the information and numbers disclosed by the company to be fair and true . Because their decisions are made based on these information.
Agreed with Mr. Venkitaraman.
I am very thankful for MR. venkitaraman krishna moorthy vrindavan
Very Informative Answers by all Expertise . For me really very helpful
