Are Reporting Entities required to disclose all financial information?

Reporting entities are not required to disclose all financial information due to the need for relevance and materiality in financial reporting. Financial statements are meant to present a fair view of the organization’s financial health and operational results while keeping disclosures focused on information that is significant to stakeholders' decision-making processes.

The principle of materiality plays a critical role here, which dictates that only information which could influence the decisions of users of the financial statements needs to be disclosed. Excessive or irrelevant information can obscure important details, leading to confusion among users instead of clarity.

In practice, this allows reporting entities to streamline their disclosures while still adhering to legal requirements and accounting standards that emphasize transparency and accountability without burdening the financial reports with unnecessary disclosures. For these reasons, only information deemed material or significant is required, aligning with the principles of effective financial communication.