Qualitative characteristics of Financial Statements - Ind AS - Indian Accounting Standards - Companies Law

Qualitative characteristics of Financial Statements A useful financial statement must be representing its purport in a manner which must be relevant and faithfully represent. Usefulness of financial statement is enhanced if it is comparable, verifiable, timely and understandable. Following characteristics should financial statements have Relevance Given information in financial should be relevant to the decision making needs to the users. Financial information is capable to influence the decisions if it has predictive value, confirmatory value, or both. Materiality Information is material if its misstatement (i.e., omission or erroneous statement) could influence the economic decisions of users (i.e., either to hold or sell the shares, etc). Faithful presentation Faithful presentation of financials means it represent what it intend to present. It would be complete, neutral and free from error. The Board s objective is to maximise those qualities to the extent possible. The Cost constraint on usefulness of financial information Applying the fundamental qualitative characteristics Enhancing qualitative characteristics- Comparability The user of financials easily enable to identify and understand similarities and differences among items. Verifiability Verifiability means that different knowledgeable and independent could reach consensus, although not necessarily complete agreement, that a particular depiction is a faithful representation. Timeliness Financial information should be timely prepared so as to benefit users to make decisions. Understandability Classifying, characterising and presenting information clearly and concisely make it understandable.