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For the Investor: Footnotes vs Face of Financials

  • FASB (US Financial Accounting Standards Board) (lt blue) Image

Nov 30, 2016

In November 2016, the Financial Accounting Standards Board (FASB) released a column by Marc Siegel, FASB Member, where he described how his prior research process, as a former investor, led to his conclusion that it definitely matters whether something is presented on the face of financial statements versus only disclosed in the footnotes.

Mr. Siegel stated that the three major factors that influenced his view related to:

  1. The timing of available information
  2. The content of that information, and
  3. Time constraint on analysts and investors to come to decisions.

In a perfect situation, all information would be available at the same time and there would be no time constraint in which to analyze it. However, as that was not the case, presentation became more important to him.

Therefore, as a FASB member, he took very seriously the question of whether presenting information on the face of the financial statement matters. In the future, if more footnote and 10-Q information becomes available earlier in the cycle of quarterly earnings results, it’s possible that the distinction might become less important. But until such a time, it will continue to be his view that presentation matters.

Review the article on the FASB’s website.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.