what is the definition of a reasonably informed reader of financial statements?

Question

This definition applies to the SEC and Sarbanes Oxley Act of 2002, the FASB, and to the AICPA

Answer 1

One who understands the underlying assumptions, estimates, their impacts, and the general pronouncements of the FASB. Of course this assumption of a reasonably informed reader is critical as it defines the sophistication of presentation allowable in 10-k's and other public documents, but as in the words of a former SEC chief, "We can't afford to be concerned in granny who buys 5 shares of GM for her grandkids".

Answer 2

One who can answer your question to your satifaction