The effectiveness of details that are being represented in the financial statement are developed through the existing IASB conceptual framework through ensuring relevancy and reliability of those information. The qualitative characteristics of useful details and knowledge such as relevance and fundamental characteristics recognized in the IASB Conceptual Framework are to be satisfied before any information is included in the financial report of a company. In addition, measurement being a challenging elements of the conceptual structure that are being introduced by the IASB are also discussed in the report.
The qualitative characteristics recognizes the distinct economic details and knowledge that can be helpful to different users for making their decision in attaining the objectives of financial report. It has been stated by IASB Conceptual Framework, that relevance and representational faithfulness are ensured to be the basic qualitative characteristics and need to be included in a financial reporting (Yen, Lai and Chen 2016). All the information that are being presented in the financial report requires to be relevant and have faithful representation.
Materiality being a factor of relevance is designated to a company frontier. The suggestion made by it stating that a single component appearing to be material to one entity, tend to be appear as an immaterial to the another entity. Moreover, all the information can be material if there is enough capability of the details and knowledge creating influence on the decision of the users (Osasere and Ilaboya 2018).
Faithful representation is important as the information is acceptable by different users as they rely on it. Hence, all the knowledge depicted in financial information must be faithful that to be included in the Financial Reporting. All the knowledge needs to be shared among different users of a company and to maintain such balance the financial statements must represent faithfulness. It is essential part as it shows an accurate establishment of the business and one can attain the figure (Olowokure, Tanko and Nyor 2016). Correct and complete details mentioned in the financial statements place a precise picture of the functional activities of the business. Facts and data needs to be presented in the financial statement without having any intervention of errors and false data to establish a fair view of the company. The result obtained from the financial statements requires to be free from false activities of business.
Thus, it can be seen that IASB conceptual framework wants each information to be presented accurately and must need relevant. In addition, feature of represent faithfulness is also important and are crucial in their own way. The other aspect which is important is to see whether these information are having support of other characteristics or not such as Timeliness, Understandability, Verifiability and Comparability (AL-Shatnawi 2017). Hence, enhancing those characteristics are taken into account:
The accountants that can be done through the investors use the financial statements that have the approach that can be done through questioning through this approach, and the accuracy is better. The accounting standards that have been used by the investors in which the accuracy will be much better if the assets and liabilities can be valued through the fair market model, which will be reflected through the current valuations (Goh, Sim and Sim 2016). Through the deliberations, it can be seen that FASB which has the accounting standard boards, that can be through the International Accounting Standards Committee, which is suggested that the assets and liabilities which will be in the current market prices, in which the organizations that can be considered that a model which can be through the financial instruments at the current value (Chen et al. 2018). According to the senior manager of Financial Accounting Standards Board, the long term goal will be as per the financial assets and liabilities, which can be recognized in the financial statement which will be upon the fair value, that will be better than the amounts which will be in the historical cost.
FASB does outline the goals, which can be done as per the valuation of fair market valuation, that can be through the determination of fair value upon the financial instruments. The valuation that has been done as per the financial assets and liabilities which will be based upon the prices that are reflected under the market assessment that will be under the current conditions that will be present values that have been as per the future cash flows which will be in the financial instruments in the organization (Slaten et al. 2018). The IASB conceptual framework does have stated in which there are different measurements which are based on the different degrees, which does vary on the combination in the financial statements. The cost that is required is done through the combination of the other measurement bases. It is through the stable measuring unit assumption, though there are several problems that can be showed up through continuing inflation in the economy. There are several instances in which the historical cost is not introduced. From the viewpoint of investors, it is preferable to use the current price measures, which will be beneficial for them to get a clear judgment in the financial statement (Visser 2018). Thus, the accountants do not have any choices rather than changing in the new model that will help them in a very much better way. So, the board has decided that it will be much better for the reporting agencies if they use the current price measures.
Conclusion
Therefore, it can be concluded from the above discussion that details that are being represented in the financial statement are developed through the existing IASB conceptual framework through ensuring relevancy and reliability of those information. The qualitative characteristics of useful details and knowledge such as relevance and fundamental characteristics recognized in the IASB Conceptual Framework are to be satisfied before any information is included in the financial report of a company. In addition, measurement are tend to be a challenging elements of the conceptual structure that are being introduced by the IASB.
References
AL-Shatnawi, H.M., 2017. Measuring the Quality of the Interim Financial Reports Using the Qualitative Characteristics of the Accounting Information and its Effect on the Investment Decisions According to the¡° IAS 34¡±. International Journal of Economics and Finance, 9(5), pp.159-170.
Benezet, A., 2019. Some historical account of Guinea. BoD–Books on Demand.
Chen, L.W., Yu, H.Y. and Wang, W.K., 2018. Evolution of historical prices in momentum investing. Journal of Financial Markets, 37, pp.120-135.
Dhawan, N. and Langdal, E., 2018. Historical price indices and price shocks: Norway 1736–1766: a macroeconomic and historical approach (Master’s thesis).
Goh, I.Y., Sim, K.H. and Sim, K.Y., 2016. Plantation Index Forecasting using Historical Price Distribution. International Information Institute (Tokyo). Information, 19(8A), p.3289.
Khorashadi Zadeh, M.H., Karkon, A. and Golnari, H., 2017. The Effect of Information Technology on the Quality of Accounting Information. Journal of System Management, 3(3), pp.61-76.
Olowokure, O.A., Tanko, M. and Nyor, T., 2016. Firm structural characteristics and financial reporting quality of listed deposit money banks in Nigeria. International Business Research, 9(1), p.106.
Osasere, A.O. and Ilaboya, O.J., 2018. IFRS Adoption and Financial Reporting Quality: LASB Qualitative Characteristics Approach.
Otubor, C.O., Gbande, R., Onumah, P., Yuguda, A.U. and Abubakar, S.I., 2017. Assessing the Qualitative Characteristics of Useful Financial Information for Business Development.
Slaten, C.D., Allen, K.A., Ferguson, J.K., Vella-Brodrick, D. and Waters, L., 2018. A Historical Account of School Belonging: Understanding the Past and Providing Direction for the Future. In Pathways to Belonging (pp. 7-23). Brill Sense.
Visser, W., 2018. The fair price rule and the South African law of contract: A historical and comparative analysis (Doctoral dissertation, Stellenbosch: Stellenbosch University).
Yen, S.H., Lai, Y.T. and Chen, H.L., 2016. Influence of Fair Value on the Qualitative Characteristics and Decision Usefulness of Accounting Information. Accounting and Finance Research, 5(4), p.179.
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