After reading thru the article Reporting Accounting Changes and
Their Multi-Period Effects, I think that it is necessary for companies
to report their changes. Specifically, if a company has an effective
accounting change over multiple years, it would be very important to
make sure financial statements projected this. As a company
stakeholder, you would want to know everything pertaining to the
financial changes that needed to occur. As an investor, you would
need to know the same. Accurately showing the financial status of
your company is not only honest, but it is required by the GAAP
principles of accounting. Knowing this set of rules in the accounting
world is very important when making and showing changes that are
both negative and positive to a company. It is always best to show the
truth of the financial status. So, I do believe that yes, companies
should report the impact of multiperiod changes.
If a company had multiperiod changes, it would be very beneficial to
an investor or company stakeholder. The reason being that the
correct financial information shows the true outline of the health of
the company. In order for an investor to make a positive decision for a
company, then they need to see and be shown the truth about any
upcoming changes that could arise. If they are in for the long term on
investment, they would be looking at more than one year, projections
of years to come. Ethically it would be very beneficial for the
company to be honest, if an investor sees something they are going to
question it.
Emett, Scott A., Nelson, Mark W.,
Reporting Accounting Changes and
Their Multi-Period Effects
, 2017
