Corporate Disclosures of the Major Sources of Estimation Uncertainties

We investigate compliance by the largest 20 Australian listed firms with regulatory requirements to disclose key assumptions and major sources of estimation uncertainties. These relate to accounting estimates that require management’s judgement in measuring the carrying amount of the entity’s assets and liabilities. While we find that firms provide some disclosure, the information is not sufficiently informative to give users meaningful insights. Overall, the level of disclosure falls short of the intentions of the relevant pronouncements. Our findings suggest that additional guidance may be necessary to improve compliance and thus increase the information value that these disclosures contribute to financial reports.