Accounting Transparency - Assignment Example

Due What is Accounting Transparency? Simply defined accounting transparency refers to a company’s responsibility to provide concise, clear, honest, and balanced view of their “financial situation” to their shareholders. Accounting transparency, specifically, relates to the financial reporting, in regards to accounting, where companies share their “financial situation” to the public. There is essentially a good faith understanding that these reports are true, honest, and accurate. These are common documents like income statements, retained earnings, cash-flow statements, and balance sheets.

(Kokemuller) Many Americans believe that it was poor accounting transparency that allowed businesses taking up risky business endeavors that contributed to the current economic crisis that the U.S. is still trying to escape. If there had been greater transparency, perhaps, the crisis could have discouraged and disciplined the risk-takers actions (Sapra). For this reason more pressure has been placed upon present businesses for greater accounting transparency. Others say that too much transparency could lead to some costly destabilization of businesses practices.

Accounting transparency is only a small part of what is flawed in the process that leads to poor and risky business practices. Focusing on just that part and trying to regulate it too heavily might have negative results, if nothing is being done to focus on all the many other relevant elements involved.(Sapra) Works CitedKokemuller, Neil. "What Is Accounting Transparency?." eHow-Money. Demand Media Inc., 2012. Web. 28 Sep 2012. .Sapra, Haresh. "More Accounting Transparency May Distort Markets: Haresh Sapra.

" Bloomberg View. Bloomberg L.P., 31 August 2011. Web. 28 Sep 2012. .