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The Qualitative Characteristics of Financial Information


 
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The qualitative characteristics of financial information

In order for the financial statements to be useful to the stakeholders of a business they must embody certain qualitative characteristics. They are defined as follows:

The fundamental qualitative characteristics:

Relevance – financial information is regarded as relevant if it is capable of influencing the decisions of users.

Faithful representation – this means that financial information must be complete, neutral and free from error.

The enhancing qualitative characteristics:

Comparability – it should be possible to compare an entity over time and with similar information about other entities.

Verifiability – if information can be verified (e.g. through an audit) this provides assurance to the users that it is both credible and reliable.

Timeliness – information should be provided to users within a timescale suitable for their decision making purposes.

Understandability – information should be understandable to those that might want to review and use it. This can be facilitated through appropriate classification, characterisation and presentation of information.

Created at 10/23/2012 11:53 AM  by System Account  (GMT) Greenwich Mean Time : Dublin, Edinburgh, Lisbon, London
Last modified at 11/30/2012 11:42 AM  by System Account  (GMT) Greenwich Mean Time : Dublin, Edinburgh, Lisbon, London

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ACCAPEDIA - The Qualitative Characteristics of Financial Information