Enhancing qualitative characteristics provide additional benefit and usefulness in the financial reporting information. The purpose of financial statements is to give financial statements information about the change in financial position, financial performance and financial position of the organization. Statements that include lengthy explanations or data that confuses the bottom line may be evidence of a company’s attempt to gloss over poor performance. The objective was to demonstrate how the qualitative characteristics, as defined by the IASB can be operationalised. Therefore Behaving ethically is an essential and expected trait. The application of the enhancing qualitative characteristics is redundant process that does not follow priority and prescribed order. Developing professional ethics in accounting profession lead to promoting the quality of financial reporting. 120 copies of structured questionnaire, designed in accordance with the underneath attributes of the qualitative characteristics, were distributed to professional accountants in three major cities in Nigeria. Business entities will need far less assistance from accountants because the financial reporting process will be quite easy to apply. Learn how your comment data is processed. This means all financials to be prepared in accordance with accounting standards will, in fact, be “general purpose”. By taking this approach, Australian businesses preparing financial statements under AASBs also conform with IFRS financial reporting which is the basis used by a majority of international businesses. A coherent set of accounting standards and rules should result. increase financial statement users’ understanding of and confidence in financial reporting. The qualitative characteristics can be categorized as fundamental (relevance and faithful representation) or enhancing (comparability, verifiability, timeliness and understandability) based on how they influence the usefulness of financial information. In Australia, we adopt the International Financial Reporting Standards (IFRS) basis of financial reporting. However, it can limited by two pervasive constraints which is cost and materiality in providing useful financial information. Lack of professional ethics accompanied with qualitative characteristics of financial reporting can make an unrealistic picture of financial reporting. Sometimes, one or some of the enhancing qualitative characteristics will be given up to maximize the usefulness of another qualitative characteristic. 1. The data generated from the survey was analysed using tables, percentages, mean and descriptive analysis. The Fundamental and Enhancing Qualitative Characteristics of Financial Information, Financial Statements Preparation of Not-For-Profit Organizations, Financial Analysis - Meaning, Definition and Methods, Financial Accounting - Definition, Nature, Scope and Limitations, Qualitative Characteristics of Financial Statements, Importance of Financial Information to Stakeholders, Important Characteristics of Financial Information, Accounting Methods Used in Financial Statement Preparation, Marketing’s Impact on Individual Consumers and Society. The study examined the perception of Nigerian accountants on the quality of financial reporting and the use of qualitative characteristics in the measurement of financial reporting quality. Enhancing qualitative characteristics are additional benefit added to the fundamental to enhance the decision usefulness of financial information. A determination should be made as to whether the incremental or additional costs of providing the proposed information exceed the incremental benefits to be obtained. This means that every time you refer to an AASB accounting standard, it has come from the international equivalent IFRS standard. Whilst this may not affect all businesses, the impact on those who do business internationally could be detrimental. Which of the following is not a benefit associated with the FASB Conceptual Framework Project? According to the FASB conceptual framework, the objective of financial reporting for business enterprises is based on the needs of the users of financial statements. A soundly developed conceptual framework of concepts and objectives should a. For Australia to maintain a single framework based on IFRS there will be only one way to prepare a financial report in accordance with accounting standards and that is by adopting all the applicable IFRS standards. But there is one exception to this rule which will be discussed later. The body who releases the IFRS standards (the International Accounting Standards Board or IASB) recently made changes to the framework for how financial statements are prepared, the so-called conceptual framework. There are two important Qualitative Characteristics Of Financial Information such as Relevance and Faithful Representation. Comparability and understandability of our financial reports need to be internationally recognised to allow our businesses to remain competitive. Hence, combination of professional ethics and qualitative characteristics of financial reporting must be used. In setting standards we will strive to require information that has both of the fundamental characteristics and as many of the enhancing characteristics as possible while minimising the cost of producing it. Therefore, relevance and faithful representation must work in a line to provide useful financial information to the users. Once the relevance is applied to distinguish which economic phenomena should be presented, faithful representation is going to determine which characteristics are best to correspond to the relevant phenomena. Comparability, verifiability, timeliness and understandability are identified as enhancing qualitative characteristics. Enhancing Qualitative Characteristics These qualities are outlined in Chapter 3 of the Conceptual Framework for Financial Reporting, approved by the International Accounting Standards Board (IASB). The study recommends training of accounting personnel on IFRS and more research studies in this area. Understandability. The enhancing qualitative characteristics of financial information distinguish more useful information from less useful information. Relevant information is capable of making a difference in the decisions made by users. The study examined the perception of Nigerian accountants on the quality of financial reporting and the use of qualitative characteristics in the measurement of financial reporting quality. It is necessary to reflect on whether one or some qualitative characteristics one or some of the enhancing qualitative characteristics will be given up to reduce the cost. Faithful representation is the concept that financial statements be produced that accurately reflect the condition of a business. Regardless of accounting standards and rules, without professional ethics, accountants can provide manipulated financial reports. Materiality is said to be one of the pervasive constraint on financial reporting because it attribute to all the qualitative characteristics. Company A issuing its annual financial reports within one month of the end of the year is an example of which enhancing quality of accounting information? Explain the level of sophistication that the Board assumes about the users of financial statements. 2. Qualitative characteristics are the attributes that make financial information useful to users. Relevance is the fundamental qualitative characteristic which connected to the economic phenomena and must be considered first before the other qualitative characteristics. For example, if a company reports in its balance sheet that it had $1,200,000 of accounts receivable as of the end of June, then that amount should indeed have been present on that date. The study adopted a survey approach. All of these answer choices are correct. The existence of accounting standards and rules per se does not guarantee a sound and appropriate financial reporting. The results further indicate that the respondents perceived faithful representation and relevance as having greater potential of enhancing the quality of financial reporting, with an average mean score of 3.2 and 3.1 respectively.