Answer to Question #79422 in Finance for Hugh Heron

Question

Why must directors provide adequate disclosure in financial reporting?

Answer 1

Adequate disclosure is an accounting concept confirming that all essential information is included in financial statements for an investor or creditor to rely on. Adequate disclosure refers to the ability for financial statements, footnotes and supplemental schedules to provide a comprehensive and clear description of a company's financial position.
An internal audit group (not to be confused with a financial auditor) would double-check the integrity of the financial statement compilation process. If it is discovered there is inadequate disclosure in any area, the deficiency would be rectified.
Source
https://www.investopedia.com/terms/a/adequate-disclosure.asp