(Cost Constraint) The AICPA Special Committee on Financial Reporting proposed the following constraints related to financial reporting. 1. Business reporting should exclude information outside of managements expertise or for which management is not the best source, such as information about competitors. 2. Management should not be required to report information that would significantly harm the com- panys competitive position. 3. Management should not be required to provide forecasted financial statements. Rather, manage- ment should provide information that helps users forecast for themselves the companys financial future. 4. Other than for financial statements, management need report only the information it knows. That is, management should be under no obligation to gather information it does not have, or does not need, to manage the business. 5. Companies should present certain elements of business reporting only if users and management agree they should be reporteda concept of flexible reporting. 6. Companies should not have to report forward-looking information unless there are effective deter- rents to unwarranted litigation that discourages companies from doing so. Instructions For each item, briefly discuss how the proposed constraint addresses concerns about the costs and benefits of financial reporting.
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