With this ever so changing economic environment, we expect changes in the
accounting world. When there is an accounting change, The U.S. GAAP and
IFRS requires full disclosure of the effect in the year the change is made.
However, they don’t require full disclosure in the future years. I believe that
companies should be expected to report the impact of changes expected in
subsequent years, especially if they have multiperiod impacts. The reason for
this is so that financial reporting can be comparable and includes consistency.
This is important for investors, lenders, and other creditors to make decisions
about the company. I also believe that multiperiod disclosure of accounting
changes would be useful to investors and other users. One reason is that
investors tend to forget to adjust for these accounting changes in periods
following the change. Also, these disclosures provide useful information to
these investors and other users, to help when making decisions about the
company.
References
Emett, S. A., & Nelson, M. W. (2017). Reporting accounting changes and their
multi-period effects. ScienceDirect. https://www-sciencedirect-
com.ezproxy.snhu.edu/science/article/pii/S0361368217300144?via%3Dihub
Whalen, J. M., Jones, J. P., & Pagach, D. P. (2017). Intermediate accounting:
Reporting and analysis. Boston, MA: Cengage Learning.
