Financial Accounting Theory and Analysis, 15th Edition

17Financial Reporting Disclosure Requirements and Ethical Responsibilities

In the preceding chapters of this text, we have attempted to give a concise yet comprehensive explanation of current generally accepted accounting principles (GAAP). We have given primary attention to those principles promulgated by the Financial Accounting Standards Board (FASB) and its predecessors in their roles as the bodies of the accounting profession authorized to issue financial accounting standards. The discussion, therefore, has often been directed toward identifying transactions to be treated as accounting information, the appropriate measurement of those transactions, criteria for classifying the data in the financial statements, and the reporting and disclosure requirements of the various Accounting Principles Board (APB) opinions and Statements of Financial Accounting Standards (SFASs).

This chapter seeks to draw attention to the special importance of disclosure in financial reporting. Specifically, we review the disclosure requirements issued by the FASB and the Securities and Exchange Commission (SEC). In addition, we examine accountants' ethical responsibility to society.

Recognition and Measurement Criteria

The original SFAC No. 5 outlined the various methods of disclosure that corporations should use in published financial statements. These disclosure requirements are summarized in Exhibit 17.1.

Although this characterization of the methods of disclosure is no longer a component ...