Companies should be expected to report the impact a change may make on
future periods. Most of what we have learned is that accounting is finding the
ways to most faithfully represent the company. In my opinion, this would
include preparing potential investors for what could happen with the company
in the future based on current changes and reminding them of the change in
notes to the financial statements in upcoming affected periods. The experiment
in the argument showed that, over time, investors would forget to calculate for
the changes that occurred if they were not given reconciliation disclosures in
all affected periods (Emett & Nelson, 2017). Being a forgetful person myself,
if I were an investor, I would very much appreciate being reminded and kept
apprised of all changes that would affect the company, and I would likely start
to feel a bit misled if the company made negative changes and did not remind
me in future statements. I am aware as investors, it is our job to do our best to
stay on top of what is happening with the company, but it seems most ethical to
continue to put these disclosures as long as the changes are having an impact.
References
Emett, S. A., & Nelson, M. W. (2017). Reporting accounting changes and their multi-
period effects. Accounting, Organizations and Society, 57, 52–72.
https://doi.org/10.1016/j.aos.2017.03.002
