Cada pergunta deste Quiz é cronometrada.
What is the purpose of this Artikel?
The construction and reconstruction of reliability in financial reporting standard-setting.
One of the most important properties of financial accounting has been the qualitative characteristics of reliability.
The trade-off between relevance and reliabiliy has shape accounting discourse over years.
In 2010, reliability was replaced by “faithful representation”
verifiability = Reliability + faithful representation
Verifiability: no fair value
Wat is nou de belangrijkste voor de kwaliteit van de informatie?
Information shall be understandable
Information is available to decision makers before it loses its capacity to influence decisions
Capable of making a difference whether the users use it or not
That helps assure users that information faithfully represents the economic phenomena (werkelijkheid)
What have Paton and Littleton (1940) identified?
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)
accounting was defined by practical knowledge: ‘‘accounting is what accountants do’’
accounting conventions are conservatism and consistency
How we can achieved the reliability?
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
faithful representation can be linked to the increasing influence and promotion of fair value
The reliability/faithful representation–discussion was associated with the conflict of fair value vs. current cost
The final framework document of IASB suggests anonymous support for the change to reliability
What is as a description of neutrality:
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
What are the consideration of conservatism in the pre-2010 Framework?
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
The revised Framework states that for financial information to be?
useful
relevant
faithfully represent
reliability
Conservatief
Why is the conceptual foundation of accounting conservatism continously changing?
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.
Waaruit bestaat in het artikel de Construction of concept of “Reliability?
Compromise between practioners and academic views
Reliability = verifiability + faithful representation
Extending of the boundaries of financial reporting away from verifiability to forwardlooking estimates (relevance over reliabililty)
Constituents will continue to use the term ‘reliabiliy”.
Wat betekent the ''twisting words'' zoals bedoeld in het artikel?
As qualitative characteristics are (necessarily) abstract and vague notions, however, they remain open to a broad range of different interpretations
Due to agreement for best solution to problems: theory was created
Creation of accounting standards based on sound theory>> academic involvement
To analyze best standard: qualitative characteristics
ASOBAT was published in 1966 and by then the notion of ‘‘reliability’’ had been dropped.
Instead ASOBAT articulated ‘‘four basic standards [. . .] as providing criteria [. . .] in evaluating potential accounting information’. Identify these four characteristics?
Verifiability
Objectivity
Freedom from bias
Relevance
Quantifiability
Faithfull representation
The concept of Reliability is compromise between?
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
Fair value was initially adopted not on the basis of academic theories, but?
because of pragmatic concerns by standardsetters about financial derivatives
adopt a long-term vision of fair value measurement in other fields of financial reporting
What argued The IASB regarding including verifiability in the frame work?
including verifiability as an aspect of faithful representation could result in excluding information that is not readily verifiable
would make the financial reports much less useful
verifiability is desirable but not necessarily required