preview

The Relevance Of Financial Information

Decent Essays

5- Relevancy of Information To be useful, financial information must be relevant and give a true picture of what it purports to represent. The usefulness of financial information is enhanced when it is comparable, verifiable, understandable and quickly disseminated. The ED does not properly address the informational needs of resource provider for NFP entities. PWC (2014) mentioned in its comment letter to the ED that the proposed draft does not “describe the additional principles or concepts that may be important to NFP contributors.” Consequently, the information presented may be too broad and not relevant to users. Scot Phillips (2014), for he Technical Issues Committee (TIC) of the AICPA underlines that paragraph D10 of the ED in not clear. Even though the ED acknowledges that not all disclosures would be beneficial the same way to contributors and investors, lenders and other creditors; it provides no clear explanation as what to expect as disclosure requirement from the Board if ever an information is appropriate to one group over another. Each actor manifest different information needs, the proposed ED is unclear and will create excessive problem in the future among the different participants. Relevancy of information implicitly means no confusion for the user. If no consistency exists about the way of applying a measurement for any line item the overall information presented would be chaotic and therefore useless. As TIC noted, Question L15 asks for an

Get Access