How does increased transparency in financial reporting and accounting procedures protect investors and prevent fraud?
When investors are buried in paper, they simply can’t use the information that’s being provided. They have a right not only to all the information they need to make financial decisions, but also to getting it in a form they can use. If a customer orders a steak, you don’t give her a cow and a meat cleaver. The SEC wants to be sure investors have access to information that’s clearly written, readily understandable and easily searchable. Complexity in accounting and financial reporting has developed over decades, in part because the real world that it seeks to depict is growing increasingly complex. Putting things in simple terms, therefore, is not a simple exercise. It’s hard work. But the effort is worthwhile, because it can save hundreds of thousands of hours for those who have to read financial disclosures and make sense of them. And it can also help prevent what happened in the notorious Enron case: Cleverly disguised fraud was hidden in a thicket of dense disclosure. Complexity is
It’s simple, every investor before investing can assess the risks and see how the company does business. A good and transparent report is a guarantee of good financial stability. If, for example, to view this report fraudster Bruce Ransom from Vancouver, you probably would have noticed questionable transactions, and would have avoided it
