Characteristics of Accounting.Accounting, as a science, has been advancing in recent years, especially public accounting, due to the convergence with international standards.
Characteristics of accounting.
Financial and non-financial information is relevant if it is capable of significantly influencing the fulfillment of the objectives of preparing and disclosing accounting information.
Financial and non-financial information are able to exert this influence when they have confirmatory, predictive value or both .
The information may be able to influence and thus be relevant, even if some users decide not to consider it or are already aware of it.
Trusted Representation
To be useful as accounting information, the information must correspond to a reliable representation of the economic and other phenomena that it is intended to represent.
Reliable representation is achieved when the representation of the phenomenon is Complete, Neutral and Free from material error .
Information that faithfully represents an economic phenomenon or another phenomenon portrays the substance of the transaction, which may not necessarily correspond to its legal form.
Understandability
Understandability is the quality of information that allows users to understand its meaning.
The financial statements must present the information in a way that corresponds to the users’ needs and knowledge base, as well as the nature of the information presented.
Understanding is enhanced when information is classified and presented in a clear and succinct manner .
Comparability
It is the quality of information that enables users to identify similarities and differences between two sets of phenomena.
Comparability is not a quality of an individual item of information, but rather the quality of the relationship between two or more items of information.
Information on the entity’s equity situation, performance, cash flows, compliance with approved budgets or other relevant legislation, or with other regulations related to fundraising and use of resources, performance of service provision and your future plans, is necessary for the purposes of accountability and accountability and decision making.
Storms
It means having information available to users before it loses its ability to be useful for the purpose of the preparation and disclosure of accounting information.
Having information available can quickly enhance its usefulness as an input for evaluation of accountability and accountability processes (accountability) and its ability to inform and influence decision-making processes.
Timelessness can make information less useful.
Verifiability
It is the quality of the information that helps to assure users that the information contained in the financial statements faithfully represents the economic or other phenomena that it proposes to represent.
This characteristic implies that two enlightened and independent observers can reach a general consensus, but not necessarily complete agreement, in which the information represents economic and other phenomena, whose intention is to represent without material error or bias; or appropriate recognition, measurement or representation method was applied without material error or bias.
It should be noted that each of the qualitative characteristics is integrated and works in conjunction with the others. However, in practice, it may not be possible to achieve all qualitative characteristics, in which case a balance or compensation between some of them may be necessary.
On the other hand, there are inherent restrictions on information, such as:
- a) materiality– Information is material if its omission or distortion could influence the fulfillment of the duty of accountability and accountability;
- b) cost-benefit– Assess whether the benefits of disclosing the information are likely to justify the costs incurred in providing and using it. In making this assessment, it is necessary to consider whether one or more qualitative characteristics can be sacrificed to some extent to reduce the cost;
- c) balance between qualitative characteristics– Qualitativecharacteristics work together to contribute to the usefulness of information. In some cases, a balance or trade-off between qualitative characteristics may be necessary to achieve the objectives of accounting information.
