Framework Preparation and Presentation Of Financial Statements: Objective of financial reports; Qualitative characteristics that make accounting information useful; The definition, recognition and measurement of the elements of financial statements; Concepts of capital and capital maintenance.
Understandability: Information should be readily understandable by users, assuming they have a reasonable knowledge of business and economic structures. Complex information should not be excluded from the financial reports though.
Relevance: Information is relevant when it influences the economic decisions of users by helping them evaluate events or to confirm or correct their evaluations of the situation. Users should be able to both predict and confirm. The relevance of information is also affected by its nature of materiality. Information is material if its omission or misstatement could influence the decisions of users. Materiality is dependant upon the size and/or nature of them. AASB 1031 defines materiality and explains its importance in making decisions about the preparation and presentation of financial reports.
Reliability: Information is reliable when it is free from material error and bias and can be depended upon by users to represent items faithfully. To be reliable, information must faithfully represent the transactions or events it purports to represent. Inherent difficulties can result in a less than faithful representation. Information must also be able to present in accordance with its substance reporting economic reality and not merely legal form. To be reliable the information must be neutral and free from bias. The report preparers must also exercise prudence by exercising a degree of caution when making judgements and estimates. To be reliable, the information must be complete without material omissions.
Comparability: Users must be able to compare the financial reports of an entity through the time in order to be able to identify trends. They...