Introduction
The qualitative characteristics of useful financial information
discussed in this
chapter identify the types of information that are likely to be most useful to
the existing and potential investors, lenders and other creditors for making
decisions about the reporting entity on the basis of
information in its financial
report (financial information).
Financial reports provide information about the reporting entity’s economic
resources, claims against the reporting entity and the effects of transactions
and other events and conditions that change those resources and claims. (This
information is referred to in the
Conceptual Framework as information about the
economic phenomena.) Some financial reports also include explanatory
material about management’s expectations and strategies for the reporting
entity, and other types of forward-looking information.
The qualitative characteristics of
useful financial information
5
apply to
financial information provided in financial statements, as well as to financial
information provided in other ways. Cost, which is a pervasive constraint on
the reporting entity’s ability to provide
useful financial information, applies
similarly. However, the considerations in applying the qualitative
characteristics and the cost constraint may be different for different types of
information. For example, applying them to forward-looking
information may
be different from applying them to information about existing economic
resources and claims and to changes in those resources and claims.
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