Timeliness – An enhancing qualitative characteristic possessed by information that is available to decision-makers in time to be capable of influencing their decisions.
The Conceptual Framework provides the following guidance [Conceptual Framework 2.33]:
Timeliness means having information available to decision-makers in time to be capable of influencing their decisions. Generally, the older the information is the less useful it is. However, some information may continue to be timely long after the end of a reporting period because, for example, some users may need to identify and assess trends.
There may also be trade-offs with accuracy to the extent that information can be improved with the benefit of hindsight, and with reliability if independent checks would delay the information.
Just to show how opinions change over time:
Timeliness: This is seen as a ‘constraint’ in the 1989 Framework (para. 43) but as an enhancing characteristic in the 2010 Framework (para. QC 29). It means making information available in time for it to be relevant.
But now a days different opinions have the lead…..
Timeliness is one of the most important factors in relevant information. Out of date information does not do investors or creditors any good when they are trying to make current and future decisions. Financial reporting must be timely and current in order to be used by investors and creditors.
Timeliness counts in reporting financial statements
Are you stretched for time when it comes to closing your books and delivering year-end financial statements? Lenders and investors may think the worst if a company’s financial statements aren’t submitted in a timely manner. Here are three assumptions your stakeholders could make when your financial statements are late.
1. You’re hiding negative results
No one wants to be the bearer of bad news. Deferred financial reporting can lead investors and lenders to presume that the company’s performance has fallen below historical levels or what was forecast at the beginning of the year.
2. Your management team is inept, uninformed or both
Alternatively, stakeholders may assume that management is hopelessly disorganised and can’t pull together the requisite data to finish the financials. For example, late financials are common when a controller is inexperienced, the accounting department is understaffed or a major accounting rule change has gone into effect.
Delayed statements may also signal that management doesn’t consider financial reporting a priority. This lackadaisical mindset implies that no one is monitoring financial performance throughout the year.
3. You’re more likely to be a victim of occupational fraud
If financial statements aren’t timely or prioritised by the company’s owners, unscrupulous employees may see it as a golden opportunity to steal from the company. Fraud is more difficult to hide if you insist on timely financial statements and take the time to review them.
See also: Conceptual Framework 2018
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