The concept of adequate disclosure is a fundamental accounting principle, ensuring that financial statements provide all necessary information for users to properly interpret them. Adequate disclosure involves including details that go beyond the basic financial numbers. This is often done through notes accompanying the financial statements, which can even be longer than the statements themselves.

Key points that typically require disclosure include:

• Subsequent events that occur after the balance sheet date but before the financial statements are issued (e.g., major losses or damage to assets).

• Pending lawsuits that could materially affect the company.

• Major customer information, such as customers accounting for more than 10% of revenue.

• Unusual transactions or conflicts of interest between the company and its officers.

The principle is designed to ensure transparency, even when the information may be damaging or embarrassing to the company​​.