Firms are not required to disclose information for years subsequent
to a change so the current frequency of disclosure is not against
compliance. According to the results of the research in the article,
Reporting Accounting Changes and Their Multi-period Effects,"
Results indicate that, as anticipated, investors who did not receive
multi-period disclosure about the accounting change exhibit
systematic forgetting...". (Emett & Nelson, 2017) If the current
disclosures are being easily forgotten then the communication is
ineffective and companies should be expected to report the impact of
changes expected in subsequent years, especially if they have
multiperiod impacts. As long as time is passing and changes are
occurring then those changes should be reported.
a a a a Multiperiod disclosure of accounting changes would be
useful to investors and other users. According to the study in the
article, "We provide evidence that accounting changes have multi-
period effects on investor judgments, and that additional subsequent-
period disclosures mitigate those effects."(Emett & Nelson, 2017) a
Investors want the most current and accurate information to make
the best business decisions. It would create a sense of transparency
and credibility for investors to receive this information more
frequently if and when there are changes. The investors and other
users would have a clearer picture of the company's status.
Reference:
Emett, S. A., & Nelson, M. W. (2017, February).
Reporting accounting
changes and their multi-period effects
. sciencedirect.com. Retrieved
June 2022, from https://www-sciencedirect-
com.ezproxy.snhu.edu/science/article/pii/S0361368217300144?via
%3Dihub
