Accounting Theory

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Introduction 1. Definition According to Robert K. Elliot, 1997, assurance is a positive declaration that produces quality information which enhances the degree of confidence for all intended users as well as improves the quality of decision that being made. It is also part of corporate governance which provide reliable and accurate information to the stakeholders such as investors, employees, government, voluntary sector and market regulators, regarding the efficiency and effectiveness of organization’s policies, strategies and operations and compliance with the statutory obligations will be provided by the management. Due to the risk of uncertainties in the environments, stakeholders demand more from financial information to…show more content…
In other words, to maintain the objectivity of the meaning intended for the information in question rather than turning it into a subjective opinion. Reliability and relevance are both important for the quality of the accounting information as both are closely related together and any of this characteristic may affect or compromise the other objectivity and vice versa. Both reliability and relevance are closely related and evolves one another, but, has different meaning when being presented. A very good example to relate to this matter is the effectiveness and efficiency of a company. Although, both relates towards the goals and objective of a company, but, both are differently applied as effectiveness measure how realizable the goals and objectives are and efficiency measure how a company utilize and optimize their resources to achieve the goals and objective. Both effectiveness and efficiency works hand in hand with each other and one may affect or compromise the objectivity of the other and vice versa. Reliability is used to measure the accuracy and truthfulness of the information. In other words, information which is reliable should be neutral, true, honest and accurate when presented to the users of the information to make decisions based on the objective of the opinion raised rather that subjective opinions being thought of. Reliability is an important characteristic as reliable information represents that the information is free from any errors and bias to
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