披露管理

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FAQs

What is GAAP reporting?

“GAAP” stands for generally accepted accounting principles. Under GAAP, companies are responsible for generating reports about their profitability, cash position, and net equity. Typically, GAAP reports include three financial statements:

The balance sheet: A statement of what a company owns and how it finances its activities. The balance sheet includes assets, liabilities, and shareholder equity as of a specific date.
The income statement: A statement of revenue earned and expenses incurred during a reporting period.
The cash flow statement: A statement of the cash-in and cash-out activities of the company.

GAAP varies across geographic locations and industries, which is why IFRS came into existence. IFRS, on the other hand, promotes a single standard of reporting requirements so that investors, analysts, and external stakeholders can ensure there is a level of consistency when comparing financial information across different companies. 

This is unlike GAAP reporting entities, which may use preparation methods that differ from country-to-country and industry-to-industry. In the US, GAAP rules are created by the Financial Accounting Standard’s Board (FASB) and enforced by the Securities and Exchange Commission.

What is multi-GAAP reporting?

Some international companies operate in countries where they are subject to both IFRS and GAAP standards, which means, they need to address compliance and reporting rulings, using two sets of standards. However, the ISAB and the FASB have been working on the convergence of IFRS and GAAP. Due to this partnership, in 2007, the SEC agreed to remove the requirement for non-US companies (who are listed on the US stock exchange) to have to reconcile financial statements with GAAP if their accounts already comply with IFRS.

Using an information system to facilitate the collection and reporting of data — via multiple hierarchies — is key to managing multi-GAAP reporting. Staying on top of accounting standards updates and applying them to your reporting structure is imperative to ensure compliance with dual standards.

What’s the difference between GAAP and statutory requirements/reporting?

Statutory rules and procedures (in the US) are based on federal and state laws that govern specific industries, such as insurance. These regulations typically overlay but don’t replace GAAP. Companies that operate in a specific industry must comply with both statutory industry regulations and GAAP. For example, the insurance industry must comply with Solvency II and banks with Basel III. For global consistency, many companies have replaced GAAP with IFRS. In fact, in recent numbers released by Bloomberg, more than half of North American based companies now report their earnings according to IFRS.

What is a disclosure report?

In the simplest of terms, disclosure reports contain information about a company's business activities, financial condition, management compensation, operating performance and future direction. Public companies prepare disclosure reports for internal and external stakeholders to shine a light on the company's performance and operating activities.

While at times voluntary, there are mandatory reports that companies must submit to maintain their status as a public-traded entity. Regulators - like the Security and Exchange Commission, European Central Bank, European Banking Authority, and European Securities and Markets Authority — establish these disclosures.

What is a disclosure?

A disclosure is a release of company information that could influence investment decisions.

What is the purpose of a financial disclosure report?

In a word: fairness. The purpose of financial disclosures is to level the playing field for investors. With a clear view of a company's financials, strategy, and direction, investors have access to information that will help them make informed investment decisions.

Securities regulators have requirements for when and how information must be disclosed. This is to help provide investors with timely and accurate information.

Most disclosure documents must be filed with securities regulators. Some disclosure documents for investment funds do not have to be filed, but must be posted on the fund’s website or sent to investors free of charge. Examples of these documents are the quarterly portfolio disclosure and annual proxy voting records.

Examples of disclosure reports are:

• 10K or annual reports
• 10Q or quarterly reports
• Proxy circulars
• Financial statements
• Prospectus
• Management’s discussion and analysis (MD&A)
• Annual information forms
• Business acquisition reports

How are disclosure reports created?

Organizations create disclosure reports according to accounting standards or regulatory bodies set by their jurisdiction's regulatory authorities or accounting bodies. For example, in the US, the Financial Accounting Standards Board (FASB) determines many standards for businesses under the US generally accepted accounting principles (US GAAP) and the SEC mandates the disclosure of specific information by publicly owned companies.

International businesses, on the other hand, must follow the disclosure standards adopted by the International Accounting Standards Board (IASB) and create disclosures according to the International Financial Reporting Standards (IFRS).

Regulators have requirements for when, how much, and where the information must be disclosed. For example, the SEC requires that 10K reports must be filed with the SEC quarterly.