Ads end in 20 seconds
This content is free thanks to our sponsors
Sponsored Ad – I may earn a commission if you click and buy
Accounting
Full Disclosure Principle
Financial statements must include all information that could influence a user's understanding of the company's position.
Full disclosure includes footnotes, contingent liabilities, related-party transactions, and significant events after the balance sheet date. It helps users make better decisions.
It's the 'tell the whole truth, not just the pretty parts' rule for company reports.
Real world: If a company is being sued for £50 million, it must disclose the lawsuit and possible loss in the notes to the financial statements even if it hasn't lost the case yet.
💡 Full disclosure builds trust — hiding bad news almost always backfires.