The Board discussed the second of three expected papers considering issues related to qualitative characteristics. In May, the Boards considered the qualitative characteristics of relevance and reliability (faithful representation). The Board discussed qualitative characteristics other than relevance and faithful representation. Show
Comparability The staff made the following recommendations:
The Board deferred a decision on this issue to the next meeting.
The Board agreed.
The Board asked the Staff to rephrase this issue so that relevance and faithful representation would not be seen as 'trumping' comparability.
The Board agreed. In addition to the above, Board members made the following points:
Understandability The staff made the following recommendations:
While the Board agreed, the staff was asked to further explain who the intended user of IFRS is meant to be as this would assist the Board in determining the detail and sophistication of its literature.
The Board agreed and added that information should be "capable of being understood."
The Board agreed.
The Board agreed. Materiality The staff made the following recommendations, which the Board agreed with:
Other candidates for qualitative characteristics Having discussed the qualitative characteristics that presently exist in the IASB and FASB frameworks, the Board discussed whether other characteristics should be added. Two characteristics were identified by the Staff and discussed by the Board: Transparency In spite of its high profile use, the term transparent, is not a qualitative characteristic presently used or defined in any major accounting framework. The Board discussed this characteristic using the word 'succinctness' and concluded that this is subsumed within representational faithfulness therefore should not be a separate characteristic in itself. True and fair The staff recommended that true and fair should be considered as a component of representational faithfulness. The Board agreed.  The two fundamental qualitative characteristics of financial reports are relevance and faithful representation. The four enhancing qualitative characteristics are comparability, verifiability, timeliness and understandability. Fundamental qualitative characteristics:
Enhancing qualitative characteristics:
References:
What are the qualitative characteristics of relevance?The four enhancing qualitative characteristics are comparability, verifiability, timeliness and understandability. The characteristic of relevance implies that the information should have predictive and confirmatory value for users in making and evaluating economic decisions.
Which of the following is an aspect of relevance according to the Conceptual Framework?The Conceptual Framework (2010) identifies relevance and faithful representation as the two fundamental qualitative characteristics which make financial information useful. Financial information is relevant if it would potentially affect or make a difference in its consumer's decision.
Which of the following relates to relevance as a qualitative characteristic of accounting information?The fundamental qualitative characteristics that make accounting information useful are relevance and faithful representation. Relevant information only has predictive value, confirmatory value, or both. Information that is a faithful representation is characterized as having predictive or confirmatory value.
What are the 4 qualitative characteristics of accounting?Qualitative characteristics of accounting information that impact how useful the information is:. Verifiability.. Timeliness.. Understandability.. Comparability.. |
Which of the following are considered aspects of the qualitative characteristic of relevance under the conceptual framework?
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