[Anonymous]

This is probably a dumb question, but I want to understand the concepts instead of just memorizing the material.

What exactly is a “disclosure”? How is it defined?

I know it is a GAAP issue, as an “inadequate disclosure” could result in a qualified or adverse opinion depending on the materiality. But does a disclosure relate to how the financials are presented on the statements?

[golfball7773]

I am very confused by your question but tomorrow I get off early and I can see if I can work something out. Or you can always join in on the AUD study group 🙂

FAR: 63, 55, 62
REG: 65, 77*
AUD: Fail, 64, 71
BEC: 72, 74, 81

*expired

[okcpa2015]

Disclosures are items that can be found in the financial statements; either in the body of the financials or as a footnote.

This does not include “other financial” or “supplemental” financial information that management might include.

FAR - 91
REG - 88
AUD - 98
BEC - 88

[jontbarker]

Financial Statement disclosures are the notes that accompany the financial statements. This should not be confused with MD&A (Management Discussion and Analysis).

Management discussion and Analysis is Management's discussion, comments and analysis of the financial statements. While they are generally presented along with the financial statements, that are not considered part of the financial statements.

Disclosures are required by GAAP and are considered as part of the financial statements. They are given to provide the users of the financial statements additional information about the statements. For example, companies must disclose their depreciation policies as well as their revenue recognition policies. The auditor will generally present management with what is know as a disclosure checklist. Management will read the checklist, ensure that they have made all of the proper disclosures and then sign off on it. A quick Google search will yield an example of the how the checklist looks as well as as an exhaustive list of all of the items for which disclosures are required.

AUD - 97 5/30/2015
BEC - 86 5/31/2014
FAR - 88 8/31/2014
REG - 87 7/30/2015

[Anonymous]

Thank you guys very much! @jontbarker, that is fantastic explanation.

The reason I ask is because for compilation engagements of nonissuers (in conformance with SSARS), the client can choose to omit substantially all disclosures for the compiled financial statements. Therefore, the auditor should state that the disclosures are omitted in the compilation report, as well as stating that the omitted disclosures are not intended to mislead users who are unaware of the omitted disclosures. It is not meant to effect the users' conclusions.

I wanted to simply clarify what “disclosures” are, in this case because the client can choose to omit substantially all disclosures. Maybe I should have put this explanation in the first post!

[Author]

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