Disclosure And Disclosure Of A Company

Publicly traded companies are subject to the reporting and disclosure requirements of the Securities Exchange Commission (SEC). The laws that govern the securities industry were established to provide transparency to investors, creditors and shareholders alike. According to Hoyle, Schaefer & Doupnik, (2015) there are seven major disclosure requirements, the first being a five-year summary of operations to encompass sales, assets, income from continuing operations. Followed by a description of business activities, a three year summary of industry segments to include foreign and domestic operations, a list of company directors and executives, quarterly market price of common stock for the last two years, restrictions on the company’s ability to continue paying dividends, and finally, an analysis of the company’s financial condition, changes in the conditions and results of operation.

There are a number of different reporting requirements that are needed to comply with the SEC. These include the provision of financial statements on a quarterly basis (10-Q) along with an annual report (10-K). These statements must adhere to a specific format that governs how financial statements are prepared, and how the information is presented. There are many sections to these forms that must be included. Moreover, the information must be accurate, and prepared to guidelines laid out in the Generally Accepted

The globalization of business activity has resulted in the need for a uniform set of accounting rules in all countries. With U.S. corporations doing so much business in other countries, it is imperative that the SEC and international regulatory boards devise a set of rules and regulations that would benefit both parties. If this did not happen, international companies would be able to do whatever they wanted without repercussion because of the discrepancies in the differing sets of rules. Accomplishing this universal set of rules would allow companies to list securities in any market without having to prepare more than one set of financial statements. There have been so many

S718 states that a disclosure document to be used for an offer of securities must be lodged with ASIC.

Entity-wide disclosures are required under Accounting Standards Codification (ASC) 280-10-50-40 through 280-10-50-42. The disclosures are required because every corporation does not report information in a similar fashion, and the disclosures would provide comparability of the financial statements among entities. For example, if a corporation uses a geographic approach in its financial statements, disclosing certain information about the products or services sold will make comparability to other companies much easier. The disclosures will also help with comparability within an entity if they decide to choose another method of reporting operating segments in the future. There are three types of entity-wide disclosures; products and services, geographic areas, and/or major customers. Every public company has to comply with the disclosures, even if the company has one reportable segment. The only exception to the entity-wide disclosures is if it is impractical to provide the information, such as it would be extremely costly to the corporation, or if the “internal reporting systems are not capable of gathering financial information by product or service by geographic area.” A disclosure should be made when entity-wide disclosures are impractical.

Prior to the enforcement of Regulation Fair Disclosure (FD), many public companies are revealing important nonpublic information to institutional investors or financial analysts, before disclose such information to the public. When this happened, those people who gain insight information can take advantage of others by buying or selling shares of the company beforehand. As a result, on October 23, 2000, the Securities and Exchange Commission (SEC) introduced the enforcement of Regulation Fair Disclosure (FD) to prevent the selective disclosure of information by publicly traded companies, which requires public companies to disclose material information as releases to financial analysts or others to the public at the same time.

This paper will analyze these views as they apply to the discloser of segment information for public entities as required by topic 280 of the FASB accounting standards codification, and discussed in Statement of Financial Standards No. 131 (“SFAS 131). The paper is structured as follows: Section II provides an overview of the objective and general purpose of financial reporting and the qualitative characteristics off useful financial information as determined by the Financial Accounting Standards Board (“FASB”), section III introduces the concept of segment reporting and outlines the requirements for disclosures of segment information for public companies, section IV evaluates the relevance of

Important notice: ASX has published this abridged guide to assist listed entities and their officers to understand and comply with their continuous disclosure obligations under the Listing Rules. Nothing in this guide necessarily binds ASX in the application of the Listing Rules in a particular case. In issuing this guide, ASX is not providing legal advice. Listed entities and their officers should obtain their own advice from a qualified professional person in respect of their obligations. ASX may withdraw or replace this guide at any time without further notice to any person. More detailed guidance on the issues covered in this guide can be found in ASX Listing Rules Guidance Note 8 Continuous Disclosure: Listing Rules 3.1 – 3.1B,

With accounting regulations that create minimum disclosure requirements, all investors will then be equipped with same accounting information so insider information and inequity of opportunities will be reduced.

These standards are conveyed to the staff on a normal basis. Insider trading guidelines have been established to ascertain that unpublished price sensitive information about the bank or any other company cannot be misused under any situation

Regulation 6 prescribes that all business websites whether or not trading on-line must list the following general information:-

If so, mandatory disclosure benefits informed customers, is neutral for uninformed customers, and harms the seller’’ (Fishman and Hagerty, 2003). Voluntary disclosure is where information is applicable to annual reports when carrying out decision making, however, is not considered a crucial part to financial reporting ‘’Mandatory disclosures provide no new-value information relevant to the capital market only when they establish the credibility of managers voluntary disclosures’’ (Gigler & Hemmer, 1998).

One of the biggest downsides of a company going public is not only the costly price attached, but also the stressful drawn-out process of documents and regulations to follow. Going public is process private firms make when they issue shares of stock to the public for the first time. If a company wants to share stock to the public, it has to conduct an initial public offering (IPO). An IPO is a process that takes weeks or months for preparation. The process starts with retaining a law firm to engage in the tedious detailed disclosure documents needed for the IPO prospectus that is included in the Securities Exchange Commission Form S-1. The Securities Exchange Commission (SEC) overseas publicly trades companies and there are various documents that need to be disclosed which include financial statements, management information circulars, management’s discussion and analysis (MD&A), earnings release and prospectuses. Most disclosure documents must be filed with securities regulator. However, some don’t have to be filled, but instead posted on the funds website or sent to investors, these include quarterly portfolio disclosure. There are two main acts under the SEC. The first is The Securities Act of 1933 which is designed to prevent fraud in the sale of securities. It requires initial disclosures about securities, such as stocks, that are going to be sold to the public (Federal regulation of publicly traded companies, n.d.)

In any business operations, full financial disclosure refers to the provision of the necessary information about a company for better decision making by the people accustomed. It is the financial revelation of a given company. There are some financial disclosures in any business that ensure proper understanding of financial statements to the financial readers, or potential auditors. Examples are the annual financial reports and the financial declarations of the company. The annual financial reports of the enterprise are very useful since they discloses the revenues recognized in the business, and the accountability of the inventories plus the income taxes accounted for during that period of operation. Second, is the disclosure of this financial statements which gives the actual revelation of the company 's stock options, liabilities and the effects of foreign currencies?! This disclosure includes the company 's balance sheet of the year, income statements and also the cash statements flows of that year. This information gives a proper understanding of the financial status users about the effects of inflation and price change on property and inventories (Berger, 2011).

While the reporting of the major operating segments of a publicly-held company is required, it is not the case with private companies. However, disclosures in regards to products and services will most likely be present in private companies’ financial statements in order to attract potential investors. The purpose of disclosing products and services is to best serve investors who are inspecting a company searching for strengths and weaknesses on their products or services network. For example, United States Steel Corporation is company who mainly focuses on major steel production in several continents. Since the company main source of revenue is the production of steel, investors will be cautious when investing money on this company since a slowing down in the economy, particularly production of cars, buildings, and machines, can significantly impact the revenue and profitability of U.S steel. On the other hand, a company like Walmart attracts investors since the company does an excellent job of diversifying its products and services, ultimately creating a number of profitable revenue streams. Investors who prefer a safe and stable investment will most likely select Walmart over other more risky investments such as U.S steel Corp.