The Balance Between Relevance and Materiality

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ais Contents Introduction 1 Relevance and reliability overview 1 The balance between relevance and materiality 2 Balancing relevance and reliability 2 The balance between flexibility and timeliness 3 Conclusion 3 Introduction Conceptual framework is a coherent system of interrelated objective and fundamentals that is expected to lead to consistent standards (Degaan 2007). There are four items in conceptual framework which are objective of financial reporting, qualitative characteristics of accounting information system, element of financial statement, and operating guidelines. One of the important items is qualitative characteristic because of that, this report focuses on qualitative characteristic which…show more content…
Balancing relevance and reliability Accounting information must have both relevance and reliability but sometime the information is very relevance but not reliability. For example when a report about cost of building which have proper detail of information but the building was acquire in 1980. Information require to balance and contrast relevance and reliability when determining how to account for particular items (Alford et al. 1993). Produce information quickly and measuring the information more accurate are the benefits if the accounting information contain of reliability and relevance. The other consideration is about cost and benefit. It can be define as cost and benefit that result from making a specific decision which have highly subjective process on many issue. Benefit of accounting information provided for users should exceed the cost of providing it (weygandt et al. 2002) It can useful to establish precise definition but it also involve a range of judgment call and wide open to criticism. To understand further about relevance and reliability this report will explain about timeliness. The balance between flexibility and timeliness The other relevance aspect is Timeliness. When information for decision making is not available when needed or it available so long after reported events mean that the information not has value or useless and not

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