I believe that companies should be expected to report the impact of
changes expected in subsequent years, whether they have multi-
period effects or not. According to the article, FAS requires firms to
disclose accounting changes that affect the financial statements in
the year the firm adopts them; however, they don’t have to report the
changes if they affect the financials over several years. In the
research done in the article
Reporting Accounting Changes and Their
Multi-period Effects
, they found that investors store the information
in their long-term memory and, over time, would forget about the
changes. It has been proven in the various studies done in the article
that if the disclosures were available for each period, the investors or
other users were less likely to forget to account for the changes.
Multi-period disclosures are helpful to investors and other users to
make quality business decisions by having all the information in hand
at the time of evaluations. A firm that provides this information in
multi-periods is disclosing all pertinent information and leaves
nothing hidden from the users. This practice would make the
accounting reports transparent and comparable to other firms.
Reference:
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
