Qualitative Characteristics of Accounting Reports Addressed by Conceptual Framework - Coursework Example

ACC5216 Accounting Theory NAME: TUTOR: SUBJECT: DATE: Introduction A conceptual framework is an analytical instrument used to capture real ideas and to put them in a memorable way as applied in accounting theory. In this essay, I will deal with qualitative characteristics of accounting reports addressed by conceptual framework. The important characteristic advantage of the theoretical framework is that conceptual framework has delivered benefits. The following are important characteristics of financial reports addressed by the conceptual framework; it addresses relevance conceptual accounting report and acts on materiality. This aspect makes financial reports relevant (Atrill, et al, 2012). The magnitude and quantity of materiality make statements more relevant. Comparability is enabled by conceptual reports.it does so by finding similarities and differences of items. It identifies this within periods of various financial reports. This helps to prepare consistent and well-defined values. Verifiability; conceptual framework enhances insightful and independent observations. This quality makes observers have one particular view. This boosts the trustworthiness of a financial report. Faithful representation; it must provide information about the material it is supporting. Conceptual framework enhances complete, neutral and free from error. This will promote the trustworthiness of the report. The complete item should have depictions and explanation.it also explains the qualities and nature of the items (Deegan, 2012). Neutrality is not bias hence free from manipulation; it promotes all aspects of reports without elimination or addition. Liabilities are not removed and expenses are not understated. Income is also not raised. Argument Timelessness as per conceptual framework can lead to alteration. It leads to the precision of sources influencing decisions. This makes financial reports more precise and enhances accuracy, Understandability; conceptual framework has concise, clear and material. This material can easily be understood. This makes financial reports effective during the presentation. Therefore, theoretical framework substantiates financial reports making them understandable. Reliability; conceptual framework questions the source of information of the items. This makes financial reports trusted and, therefore, making the financial reports reliable every time the reports are presented (Henderson, 2013). This boosts the integrity of financial reports. This quality is thus addressed by conceptual framework. Comparability is important in these characteristics. It promotes the mathematical view of the reports. This is done by establishing differences and similarities the reports. Differences bring about how far quantitatively an item is far from the other. This brings about the magnitude of the material. The differences make reports have its enhanced material ability. Similarities brings equality in various financial reports. This is important in that financial reports which are the same can be used to predict the future so that planning of those items can easily be done. In other areas where the elements are similar, they can be transferred directly. The advantages of a conceptual framework are as follows; it creates clarification as verifies items making it clear for the observers to internalize what they observe. A clear financial report forms a proper understanding, therefore leading to a consensus within the observers’ minds. Conceptual reports enhance profit. Financial reports with its items properly verified lead to minimal losses due to its reliability a rise in the items can be detected and invested in the correct way. It prevents losses in that there is no exaggeration of liabilities and expenses are correctly recorded. Conceptual reports create trust as there is no manipulation of data recorded. This creates a conducive environment for a thriving business. Its aspect of similarity and differences by comparing prevents losses is vital in that when items of one place and that of another are compared and found to be tallying, then there is no point of repeating next time. According to Hoggett, (2015) Conceptual reports saves time as the panel of observers can easily understand the concepts of the reports. This leads to understanding and an amicable solution to various problems is reached faster. The idea of reliability in the materials boosts the complete acceptance of the report. Initial verification prevents errors and mistakes. Elimination of this two factors improves the quality of the report. Timelessness allows consultation and proper screening. This makes information more reliable. Expertise knowledge can also be sought if time is available. The panel is analyzing and also leads to gathering the other data which was scattered and difficult to put in together the data can also have time to seek and consult the involved parties. In the case of default, the error can be corrected if there is time. Evidence A conceptual framework has materiality in it. This is advantageous when it comes to observation. The scrutinizing panel will have enough material to discuss. This creates understanding and proper decisions. Although conceptual framework is important, it has its disadvantages which include the following; It is expensive; seeking the materiality needs labor. These technocrats are paid and it’s too expensive, especially for large organizations. Stipulating on the reliability by the panel needs money. Comparing items also need machines. Calculators and computers are required to know the differences and similarities. Reliability needs the people concern to have integrity. This is not usually the case. There are corruption and bad will in catering for the item information. This makes reliability a difficult thing in the conceptual framework. The conceptual framework needs time. Time is limited and can lead to poor data (Deegan, 2013).. The conceptual framework works with reliability. To find a reliable situation, the people should be reliable. This may not be there leading to the establishment of unreliability. This creates a problem when materiality is checked as it will carry less material. Although the current conceptual framework has delivered advantages as enhanced accountability, reliable items in the sector. Audits also represent exact information on the ground. When money gets lost the place and time can be identified (Alfredson, et al, 2012). The source of error can easily be detected. This is due to the integrity of the material. The conceptual framework for the sector has also enhanced development. Countries growing can account for their projects as a proper understanding of fiscal budget has been enhanced. Proper presentation of information concerning various sectors is also enabled making it easy to detect corruption when auditing is done. Comparison of various data in institutions has helped in planning. Schools and hospitals can get their recurrent expenditure well done. They get assured of their annual budgets. Accounting of profits can now be trusted as there is no manipulation of expenditure, liabilities are presented and expenses correctly calculated. The final value can now be done. Comparing all these, classified profits are established. This can now be used to extend to other projects. This is enhanced by comparability which is quality addressed by conceptual framework. Losses have been quelled by organizations. When the value of output and input is negative, a loss is detected. The source of the loss is analyzed and corrected before worsening. This has saved institutions from being closed down thus the framework is delivering. The relevance of material has been enhanced. This is by far important. Material from the actual sources has been used to depict values. This makes the report understandable. Example when we talk of total cars exported in London, it comes out finally as cars, not Lorries. This makes it easy to understand. The panel can then go on to analyze it properly. Currently, computerization has enhanced integrity.so that information directly from banks is trusted. This has saved time. People can bank in Washington and withdraw from Berlin (Beatty, et al, 2014). This integrity of transaction has saved time and resources. Mobile banking has enhanced timelessness it has done things faster. This has created time for observation of the material making clear. Neutrality of material is also enhanced. The information cannot be exaggerated in institutions. Countries have created commissions to oversee neutrality. These commissions enhance neutrality. They make sure no information is eliminated or added. The final result will come out as prescribed. Then the relevant bodies can work on this finances. Allocation of resources is properly distributed. Example us government can allocate the good amount to Illinois. It can allocate sufficient amount to North Carolina. Even with varying population everybody can receive the correct amount. The military can allocate a proper amount to its soldiers. A general can earn their amount as required. conclusion In conclusion, the present framework has delivered as It is used worldwide with few cases of failure. It has neither resulted in losses. In corrupt countries preferably in Africa, there is the poor integrity of the material, despite that the framework has enabled the realization of the same. To make this framework deliver more, the following should be done. The relevance of financial reports should be enhanced. Comparability of material should also be maximized. The information delivered should be understood as well. This will help institutions to curb failures and also make the framework deliver more as it is already done. The present society has seen the framework deliver. The mention adjustments will make it better in the future. Bibliography Atrill, P., McLaney, E. and Harvey, D., 2014. Accounting: An Introduction, 6/E (Vol. 6). Pearson Higher Education AU. Deegan, C., 2012. Australian financial accounting. McGraw-Hill Education Australia. Henderson, S., Peirson, G., Herbohn, K., Artiach, T. and Howieson, B., 2013. Issues in financial accounting. Pearson Higher Education AU. Hoggett, J., Edwards, L., Medlin, J., Chalmers, K., Hellmann, A., Beattie, C. and Maxfield, J., 2014. Financial accounting. Hoggett, J., Edwards, L., Medlin, J., Chalmers, K., Hellmann, A., Beattie, C. and Maxfield, J., 2015. Accounting. Leo, K.J., Hoggett, J. and Sweeting, J., 2012. Company Accounting, Google eBook. John Wiley & Sons. Deegan, C., 2013. Financial accounting theory. McGraw-Hill Education Australia. Alfredson, K., Leo, K., Picker, R., Pacter, P., Radford, J. and Wise, V., 2012.Applying international accounting standards. John Wiley & Sons. Beatty, A. and Liao, S., 2014. Financial accounting in the banking industry: A review of the empirical literature. Journal of Accounting and Economics,58(2), pp.339-383. Read More