What is Useful Financial Information?

Or more formally: Qualitative Characteristics of Useful Financial Information What is Useful Financial Information?

What types of information are useful to users for making decisions about the reporting entity using the general purpose financial report compiled by the reporting entity. And equally important what are the cost constraints on the reporting entity’s ability to provide useful financial information.

Some information will be more important than other information and some more important information will be easily maintained, collected and reported and other more important information will be expensive to maintain, collect and report, the question being when it is too expensive to maintain, collect and report.


The first two fundamental qualitative characteristics…..

Financial information is considered to be useful if it … Read more

The Objective of General Purpose Financial Reporting

To provide financial information about the reporting entity that is useful to existing and potential investors, lenders and other creditors in making decisions about providing resources to the entity. Those decisions involve buying, selling or holding equity and debt instruments, and providing or settling loans and other forms of credit.

The Objective of General Purpose Financial Reporting is the basis of the Conceptual Framework.

In addition the 2018 revised Conceptual Framework sets out:

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Conceptual Framework for Financial Reporting

Just as an introduction some language thoughts to better understand what we are talking about.International Financial Reporting Standards 2

Conceptual: consisting of concepts Conceptual Framework for Financial Reporting

Concept: an abstract or generic idea generalized from particular instances Conceptual Framework for Financial Reporting

Framework: a basic conceptual structure (as of ideas) Conceptual Framework for Financial Reporting

So that is a lot of concepts!


It shows implicit that it is about ideas, thoughts and/or notions. It is likely to suggest the result of reflecting, reasoning or meditating rather than of imagining. So it is the result of a due care thought process to enhance the understanding of Financial Statements and the IFRS standards defined to contribute to transparency, strengthen accountability and contribute … Read more