Verifiable, objective evidence, ensuring the ‘‘dependability of the accounts as acentral concept of accounting practice.

Impersonal and external to the person most concerned, in contrast with that person’s unsupported opinion or desire

Historically, the beginning of bookkeeping practices was based on using accounting the help people remember past transactions, because the human brain is limited

Closely related to auditing function

Trade was facilitated by keeping accounts which could be verified by third parties (e.g. creditors)

Guaranteeing that accounting information is a faithful representation of what it purports to represent, ‘‘coupled with an assurance for the user, which comes through verification, that it has that representational quality.

Thus, representational faithfulness and verifiability are equally important components of reliability, supplemented by the related concept of neutrality

free from error and bias and faithfully represents

Practioners were strongly opposed to current values in financial statements

faithful representation can be linked to the increasing influence and promotion of current value

To be reliable, the information contained in financial statements must be neutral

free from bias

Assets or income are not overstated and liabilities or expenses are not understated.

conceptually extends the boundaries of appropriate financial reporting

the original idea of the verifiability of accounting

The absence of bias intended to attain a predetermined result or to induce a particular behaviour

Neutrality is supported by the exercise of prudence

the exercise of conservatism, in the form of a degree of caution, under conditions of uncertainty, in not overstating net assets

the exercise of conservatism, in the form of a degree of caution, under conditions of uncertainty, in overstating net assets

the absence of conservatism, in the form of a respect for neutrality, avoiding a deliberate understatement of net assets

the absence of conservatism, in the form of a respect for reliability, avoiding a deliberate overstatement of net assets

useful

relevant

faithfully represent

reliability

Conservatief

The Board sought a balance between providing high-level concepts and providing enough detail for the Conceptual Framework to be useful to the Board and others.

The Conceptual Framework as a practical tool to help it use Standards.

Users of financial reports need information to help them assess management’s stewardship.

the Board clarified the roles of prudence, measurement uncertainty and substance over form
in assessing whether information is useful.

Compromise between practioners and academic views

Reliability = verifiability + faithful representation

Verifiability: no fair value

Extending of the boundaries of financial reporting away from verifiability to forwardlooking
estimates (relevance over reliabililty)

Constituents will continue to use the term ‘reliabiliy”.

Verifiability

Objectivity

Freedom from bias

Relevance

Quantifiability

Faithfull representation

traditional idea of objectivity reflected in the characteristic of verifiability

deeply entrenched in accounting practice but redefined as the academics’ consensus concept

the faithful representation of economic phenomena as part of economic decision models
with a focus on valuation decisions by users

Practioners were strongly opposed to current values in financial statements