Investors •
to assess past performance as a basis for future investment
Employees •
to assess performance as a basis of future wage and salary
negotiations
•
to assess performance as a basis for continuity of
employment and job security
Lenders •
to assess performance in relation to the security of their loan
to the business
•
to assess the performance in relation to payment of the
interest (finance cost) on the loan provided
Suppliers •
to assess performance in relation to receiving payment of
their liability
Customers •
to assess performance in relation to the likelihood of
continuity of trading
Government •
to assess performance in relation to compliance with
regulations and assessment of taxation liabilities
Public and environmental bodies •
to assess performance in relation to ethical trading
Qualitative characteristics
As shown above, financial statements are prepared for a variety of reasons. The Conceptual Framework for
Financial Reporting developed by the International Accounting Standards Board (IASB) sets out the
qualitative characteristics of the financial statements that makes them useful to the users:
Fundamental qualitative characteristics •
Relevance – the information influences the economic decisions of users.
•
Faithful representation – the information must be complete, neutral and free from errors.
Enhancing qualitative characteristics •
Comparability – the information enables comparisons with similar information about other entities
and with similar information about the same entity over time to identify and evaluate trends.
•
Verifiability – the information is faithfully represented and can be verified, providing assurance to the
user that it is both credible and reliable.
•
