120 copies of structured questionnaire, designed in accordance with the underneath attributes of the qualitative characteristics, were distributed to professional accountants in three major cities in Nigeria. The data generated from the survey was analysed using tables, percentages, mean and descriptive analysis. The results further indicate that the respondents perceived faithful representation and relevance as having greater potential of enhancing the quality of financial reporting, with an average mean score of 3.2 and 3.1 respectively. Findings also revealed that, although the adoption of IFRS has greatly impacted the quality of financial reporting, training on IFRS and qualitative characteristic-based study are still scanty.
“Acceptance From Foreign Private Issuers of Financial Statements Prepared in Accordance With International Financial Reporting Standards Without Reconciliation to U.S. GAAP,” Page 7. GAAP may be contrasted with pro forma accounting, which is a non-GAAP financial reporting method.
What are the fundamental qualitative characteristics of accounting?
In accounting the qualitative characteristics include relevance, reliability, comparability, and consistency. Qualitative characteristics are discussed in the Financial Accounting Standards Board’s Statement of Financial Accounting Concepts No. 2.
Internationally, the equivalent to GAAP in the United States is referred to as international financial reporting standards (IFRS). IFRS is followed in over 120 countries, including those in the European Union (EU). Qualitative characteristics or qualities necessary for information serve a major supporting role in the decision usefulness, decision model approach to accounting theory. Qualitative characteristics are the tributes that make the information provided in financial statements useful to users.
Financial accounting is oriented toward the creation of financial statements, which are distributed both within and outside of a company. Managerial accounting is more concerned with operational reports, which are only distributed within a company. If a company distributes its financial statements to the public, it is required to follow generally accepted accounting principles in the preparation of those statements. Further, if a company’s stock is publicly traded, federal law requires the company’s financial statements be audited by independent public accountants. Both the company’s management and the independent accountants must certify that the financial statements and the related notes to the financial statements have been prepared in accordance with GAAP.
Statements of Financial Accounting Standards were published by the Financial Accounting Standards Board to provide guidance on specific accounting topics. The Statement of Financial Accounting Concepts is issued by the Financial Accounting Standards Board (FASB) and covers financial reporting concepts. Although these principles work to improve the transparency in financial statements, they do not provide any guarantee that a company’s financial statements are free from errors or omissions that are intended to mislead investors. There is plenty of room within GAAP for unscrupulous accountants to distort figures.
The study recommends training of accounting personnel on IFRS and more research studies in this area. Accountants have obligations to shareholders, creditors, employees, suppliers, the government, the accounting profession and the public at large. Decisions made on information provided by accountants can materially affect the lives of any or all of these stakeholders. Expectations of society is very much from the Professionals and People need to have confidence in the accounting profession by providing quality of complex services.
What are the four main qualitative characteristics of financial statements?
Relevance and faithful representation are categorized as the fundamental qualitative characteristics of financial reporting information. The enhancing qualitative characteristics on the other hand include understandability, comparability, verifiability and timeliness).
Data Analysis and Discussion of Findings
This fiinding reveals that top management support, culture, ethical leadership, open communication channels, and ethics training are considered essential to improve the quality of fiinancial reporting. Generally accepted accounting principles (GAAP) refer to a common set of accounting principles, standards, and procedures issued by the Financial Accounting Standards Board (FASB). Public companies in the United States must follow GAAP when their accountants compile their financial statements. GAAP is a combination of authoritative standards (set by policy boards) and the commonly accepted ways of recording and reporting accounting information. GAAP aims to improve the clarity, consistency, and comparability of the communication of financial information.
- 120 copies of structured questionnaire, designed in accordance with the underneath attributes of the qualitative characteristics, were distributed to professional accountants in three major cities in Nigeria.
- The study examined the perception of Nigerian accountants on the quality of financial reporting and the use of qualitative characteristics in the measurement of financial reporting quality.
The study examined the perception of Nigerian accountants on the quality of financial reporting and the use of qualitative characteristics in the measurement of financial reporting quality. The objective was to demonstrate how the qualitative characteristics, as defined by the IASB can be operationalised.
FASB indicates that two of the most important accounting characteristics include relevance and reliability. This study examines the influence of business ethics commitment toward financial reporting quality.
So, even when a company uses GAAP, you still need to scrutinize its financial statements. Due to the progress achieved in this partnership, the SEC, in 2007, removed the requirement for non-U.S. companies registered in America to reconcile their financial reports with GAAP if their accounts already complied with IFRS.
Developing professional ethics in accounting profession lead to promoting the quality of financial reporting. The Financial Accounting Standards Board provides the standards that businesses use when creating financial reports for others to review. Securities and Exchange Commission jointly created the Generally Accepted Accounting Principles, known in the industry as GAAP, to provide guidance to accountants when completing financial reporting.
Financial statements used by external entities are prepared using generally accepted accounting principles, or GAAP. The international alternative to GAAP is the International Financial Reporting Standards (IFRS), set by the International Accounting Standards Board (IASB). In accounting the qualitative characteristics include relevance, reliability, comparability, and consistency. Qualitative characteristics are discussed in the Financial Accounting Standards Board’s Statement of Financial Accounting Concepts No. 2. Financial accounting requires that financial statements be issued following the end of an accounting period.
Qualitative Characteristics of Financial Information
Managerial accounting may issue reports much more frequently, since the information it provides is of most relevance if managers can see it right away. These qualities are outlined in Chapter 3 of the Conceptual Framework for Financial Reporting, approved by the International Accounting Standards Board (IASB). International Accounting Standards are an older set of standards that were replaced by International Financial Reporting Standards (IFRS) in 2001.
General-purpose financial statements provide much of the information needed by external users of financial accounting. These financial statements are formal reports providing information on a company’s financial position, cash inflows and outflows, and the results of operations. Many companies publish these statements in annual reports, also known as a 10-K or a 10-Q (quarterly report). The annual report contains the independent auditor’s opinion as to the fairness of the financial statements, as well as information about the company’s activities, products, and plans. Typically, the best place to find these reports for a public company can be on their website under the Investor relations section.
qualitative characteristics definition
therefore, The information provided by accountants should significantly efficient, reliable, realistic and are unbiased. Lack of professional ethics accompanied with qualitative characteristics of financial reporting can make an unrealistic picture of financial reporting. Regardless of accounting standards and rules, without professional ethics, accountants can provide manipulated financial reports. The existence of accounting standards and rules per se does not guarantee a sound and appropriate financial reporting. Hence, combination of professional ethics and qualitative characteristics of financial reporting must be used.
This study uses explanatory research method and a multivariate regression test to conduct the statistic testing. The result indicates a positive influence of the implicit business ethics commitment on the financial reporting quality.