Topic 1: What is Good Accounting Information

Learning Objectives Discuss the nature and purpose of accounting from economic events to reporting and decision making. Define the qualitative characteristics of useful financial information (both fundamental and enhancing) established in the IASB/AASB’s Conceptual Framework. Define the information qualities of validity, accuracy, and completeness, with respect to both transactions and balances. Discuss the relationship between the Conceptual Framework’s qualitative characteristics and the information qualities of validity, accuracy and completeness, in the context of the conceptual roadmap of accounting.

Qualitative Characteristics - Information reliability goals

Validity, Accuracy, Completeness-event, Completeness-detail

Accounting

The process of identifying, measuring, understanding and communicating economic information about an entity for decision making by a variety of users.

Qualitative Characteristics - Conceptual Framework

Faithful Representation, Relevance, Timeliness, Understandability, Comparability, Verifiability

Validity

Data recorded pertains to actual transactions, events, objects that were authorised, actually occurred and involved actual entities.

Accuracy

Correspondence or agreement between data and the transactions, events and objects that the data represents.

Completeness

The degree to which information includes data about every relevant object or event necessary to make a decision.

Completeness - event

Refers to the extent to which all economic and business events are recorded.

Completeness - detail

Refers to the extent to which all the fields within a data record are recorded.

Relevance