Quality of Financial Information - Essay Example

Various patterns and formats of the financial statements. Some of them are considered conventional formats and some of them are unorthodox and are used for certain specific purposes. The quality of financial information is quite dependent upon the purpose of the financial statement. So if the financial statements are used by any specific entity for its purpose, then the financial information provided in the financial statement can be used rather in a different way. Normally, if the financial statements are meant for general purposes, then the information provided in those financial statements is developed based on the commonly used accounting standards. Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS) are used by the reporting entities to prepare their financial statements for a common user.  These accounting standards provide a general pattern and policies to furnish financial information in such a manner that a person with little financial knowledge can easily grasp the information content presented under those financial statements.

Quality of Financial Information

If the financial statement of Morson Inc and Kforce Inc are taken into consideration, both of them are formatted in an unconventional pattern. Both of the firms have prepared their financial statements to fulfill the requirements of a particular user group as the financial statements show a pattern that is quite inconsistent with other generalized patterns. If the income statements of both companies are taken into account, then it can be noticed that the conventional “step method” is not completely followed. The other major discrepancy that can be observed is that finance cost is shown separately, however, in the conventional format it is displayed after operating results and before the tax expenses. In a generalized pattern, no term like “equity earning” is used but this term is used in both financial statements. Overall, the accounting heads under the income statement are displaced for their intended users and do not provide general results.