The AICPA Special Committee on Financial Reporting proposed thefollowing constraints related to financial reporting.
1. Business reporting should exclude information outside ofmanagementâs expertise or for which management is not the bestsource, such as information about competitors.
2. Management should not be required to report information thatwould significantly harm the companyâs competitive position.
3. Management should not be required to provide forecastedfinancial statements. Rather, management should provide informationthat helps users forecast for themselves the companyâs financialfuture.
4. Other than for financial statements, management need reportonly the information it knows. That is, management should be underno obligation to gather information it does not have, or does notneed, to manage the business.
5. Companies should present certain elements of businessreporting only if users and management agree they should bereportedâa concept of flexible reporting.
6. Companies should not have to report forward-lookinginformation unless there are effective deterrents to unwarrantedlitigation that discourages companies from doing so.
For each item, briefly discuss how the proposed constraintaddresses concerns about the costs and benefits of financialreporting.
The AICPA Special Committee on Financial Reporting proposed thefollowing constraints related to financial reporting.
1. Business reporting should exclude information outside ofmanagementâs expertise or for which management is not the bestsource, such as information about competitors.
2. Management should not be required to report information thatwould significantly harm the companyâs competitive position.
3. Management should not be required to provide forecastedfinancial statements. Rather, management should provide informationthat helps users forecast for themselves the companyâs financialfuture.
4. Other than for financial statements, management need reportonly the information it knows. That is, management should be underno obligation to gather information it does not have, or does notneed, to manage the business.
5. Companies should present certain elements of businessreporting only if users and management agree they should bereportedâa concept of flexible reporting.
6. Companies should not have to report forward-lookinginformation unless there are effective deterrents to unwarrantedlitigation that discourages companies from doing so.
For each item, briefly discuss how the proposed constraintaddresses concerns about the costs and benefits of financialreporting.