Correction
Useful disclosure supplies relevant information clearly. More words do not necessarily provide more information, and added explanation does not cure incorrect amounts in the statements.
Why adding text can feel safer
A preparer may worry that removing any sentence will leave something out. Copying every available paragraph can instead bury the facts a reader needs. Required information must remain, but repetition is not a substitute for it.
Compare two descriptions
Harbor Design's draft note says, “The company uses estimates that may differ from actual results.” That sentence does not identify which estimate matters or what makes it uncertain.
A more informative explanation identifies the customer balances at risk and the facts used to estimate collection. It gives readers something specific to evaluate. This is a writing comparison, not a complete receivables disclosure checklist.
Check your answer
For each paragraph, identify the requirement or company-specific information it serves. Keep necessary detail and explain unfamiliar terms. Remove duplication only after confirming that required information remains.
Also distinguish disclosure from recognition. A note describing an omitted liability does not replace recording that liability when the applicable rules require it. Clear writing improves the note; it does not change the accounting.
The Financial Accounting Standards Board discusses the purpose and limits of notes in Concepts Statement 8, Chapter 8, D1–D8.
When this mistake may appear
- A note repeats generic statements.
- A preparer adds text to avoid deciding what information the reader needs.
Your work may contain this mistake if:
- Adds wording without identifying what information it supplies.
- Uses a note to excuse an incorrectly recorded amount.
- Leaves important company-specific information buried in repetition.