Companies need to disclose the negative effects and consequences of their products and services as well as the positive ones. If a product or service is making people sick, destroying the environment, or poisoning the air we breathe, people take notice. Companies also need to communicate the good that their products and services bring to society. The public as stakeholders voice their concerns with their pocketbooks. Whether the information is good for bad, stakeholders need to know in order to make financial decisions. Companies should disclose all of their lines of business. If a company is known only for making chocolate, but also has sells razor blades; then both products lines need to be disclosed along with all the financial statements and environmental impacts. If the chocolate making line made all of their profit and it was subsidizing the razor blade line of business, the loss of income from the chocolate division needs to be accounted for or vice versa. Expected earnings from chocolate would not be as high as investors thought because they did not know that the company was also supporting cheap razor blade manufacturing. …show more content…
If an account as several smaller transactions that seem off and probably could use some investigation, accounting is likely to overlook them as they are deemed immaterial and would cause no impact on the financial statement; not to mention the time and money wasted looking into a few cents here or there. However, small transactions can add up to and cause a material impact and have a significant difference on the financial statement. Small immaterial costs such as losing one or two razor blades would not have a significant impact unless they fell into chocolate production. Management might reason that the chances are small that any harm would come to anyone and it would be too costly to stop chocolate production and start