2. Definition of relevant and reliable information
Discussions on:
Timeliness
Cost and benefit
Materiality
Balance between qualities characteristic
Verifiability
FASB and IASB constraints
Conclusion
3. if is capable of making a difference in a
decision
has predictive value
has feedback value
is timely
4. The degree of correspondence between what that
information conveys to users and the underlying
transactions
Is verifiable; independent users can arrive at the same
conclusion
Is a faithful representation of what actually happened
Is neutral; free from bias
5. having information available to decision
makers before it loses its capacity
Lose its relevance if there is undue delay in it
being reported
weigh the relative merits of timely reporting
and the provision of relevant and reliable
financial information
6. how much will it cost to uphold the qualities of relevant and
reliability , what benefit will they get.
The cost of providing information should not outweigh the
benefit derived
Costs and benefits are not always obvious or quantifiable
Different point of incidence of benefit and cost
Sound judgement must be used in providing information
E.g. hiring of external auditor, valuation of asset
7. Information that can influence the decisions that
users make on the basis of an entity’s financial
information.
it is not possible to specify a uniform quantitative
threshold
cross road over qualitative and quantitative
materiality concept
misstatements will result in information that is
incomplete, biased or not free from error
8. appropriate balance among the
characteristics in order to meet the objective
of financial statements
Information may be relevant but so unreliable
in nature or representation
9. User specific constraint
implies a consensus among different measurer
impossible for every user to verify the
information provided
Consider how a shareholder can verified the all
figures in income statement with its underlying
transaction.
This limits external users’ reliability on financial
information.
11. As accounting theory is like cloud seen
differently by everyone so as its constituents
thus, these constraints can also be classified
as attributes depending on its application.
12. Eldon S. Hendriksen, Accounting Theory
Ahrmed Riahi-Belkaoui Accounting Theory
Jawahar Lal, Accounting Theory and Practice,
Himalaya Publishing House, 2008
Institute of Chartered Accountants, Australia
Qualitative Characteristic of Financial
Information I (SAC 3).
Financial Accounting Standard Board Qualitative
Characteristic of Accounting Information I (CON 2
2008).
International Accounting Standard Board
Qualitative Characteristic of Financial
Information I (Issue paper 2009).