Required and voluntary explanatory information that supports financial statements and helps users interpret the reported numbers.
Financial disclosures are the explanatory details that accompany financial statements and help users interpret the numbers properly.
Disclosures often explain:
accounting policies
major assumptions and estimates
commitments and contingencies
risks and uncertainties
breakdowns of important line items
They matter because the face of the statement is often too compressed to tell the full story by itself.
Good disclosures improve:
transparency
comparability
decision usefulness
understanding of risk and judgment
Weak disclosures can make technically correct statements much less useful.
Financial Reporting: The broader process that includes disclosures.
General Purpose Financial Statements: The reporting package disclosures typically support.
Off-Balance-Sheet: Often depends heavily on disclosure quality.
Post-Balance-Sheet Events: A common disclosure-sensitive area.
Statement of Changes in Equity: One of the statements often supplemented by detailed note disclosure.