Regulatory Disclosures:

Financial Reporting Principles

  

High-Quality Financial Information

Position: Providers of financial information, regardless of size, industry, locale, or maturity, must adhere to the highest standards of transparency, accuracy, relevance, and timeliness in financial reporting.

Rationale: By holding all issuers to the same standards, investors would be assured of the highest-quality financial information they need to make informed investment decisions. Information quality is a function of the accounting methods used to develop the numbers, the reliability and transparency of the reported information, and the timeliness with which the information is presented to shareholders.

Where stated: EAC - UK Listing Rules

 

Quality of Financial Reports and Corporate Disclosures

Position: The need of investors for timely, full, complete, and transparent financial information supersedes the desires of issuers to minimize costs by avoiding such disclosures.

Rationale: Investors provide the capital that issuers need to grow. In return they need information to assess the investment prospects of issuers. And because investors are the owners, they are entitled to receive the information they request.

Where stated: EAC - UK Listing Rules; CFA - SEC Shorter Filing Deadlines; CAC Letter OSC Fair Dealing 2004 (PDF)

 

Basis for Accounting Treatment of Transactions

Position: The economic substance of a transaction or activity should drive the accounting treatment of that transaction or activity.

Rationale: Neither the form of a transaction nor the industry of the company involved should affect the way a transaction is recorded and reported.

Where stated: CAC - 5-Yr Review

 

Role of Accounting Standards

Position: The guiding principle of financial reporting standards should be to strive to convey the economic substance of transactions and other corporate activities.

Rationale: For example, omitting items such as special-purpose entities, employee stock options, pensions, and executory contracts from on-financial statement recognition and reporting distorts the financial statements and misleads investors and other users about the true economic condition and performance of the company.

Where stated: USAC Audit SC - Audit Oversight