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Qualitative Characteristics of Financial Information - Essay Example
Finance & Accounting
Pages 8 (2008 words)
Qualitative Characteristics of Financial Information Table of Contents Table of Contents 2 Introduction 3 Qualitative Characteristics of Financial Information 3 Materiality 5 Prudence & Neutrality 7 Relevance & Reliability 7 Conclusion 9 References 11 Appendices 13 Introduction This essay aims to present an analysis of the qualitative characteristics of the financial information and the major constraints presented by these characteristics…
The information is not just useful for the capital providers but also to the other user groups such as government, regulatory bodies etc. The next level of conceptual framework is the fundamental concepts i.e. qualitative characteristics of financial information and elements of financial statements. The third level is the implementation level, which contains recognition, disclosure and measurement concepts through principles, assumptions and constraints (Appendix 1). The qualitative characteristics of financial information are an important part of the total conceptual framework because they act as a bridge between the first level and third level of the framework. However, the definition of quality threshold of materiality and the conflicts between prudence and neutrality, and relevance and reliability has always been debated. In addition to the discussion of these constraints, this essay presents the Conceptual Framework for Financial Reporting 2010 provided by IASB as to how the new framework has placed these characteristics. ...