Accounting Commons^™

Critical Accounting Policy And Estimate Disclosures: Company Response To The Evolving Sec Guidance, Susan B. Hughes, James F. Sander, Jillian K. Snyder

James F. Sander

In late 2001, soon after numerous financial reporting failures including the much publicized demise of Enron, the SEC began a series of initiatives to improve critical accounting policy (CAP) and critical accounting estimate disclosures included within the MD&A section of Form 10-K. The first announcement, in the form of cautionary guidance, was issued in December 2001. This was followed by a Proposed Rule in 2002, and additional disclosure guidance near the end of 2003. Combined, the guidance required companies to provide information that would help investors understand the impact of estimates, accounting policies and external factors on financial results. Through …