In order for the financial statements to be useful to the stakeholders of a business, they must embody certain qualitative characteristics. Reliability. The relevant financial information helps the users of the financial statements to take a different economic decision. This can be facilitated through appropriate classification, characterisation and presentation of information. Understandability – Information presented in the financial statements should be understandable to those that might want to review and use it. For financial decision making, financial information have to be predictive or information, or both. Predictive Values help users in anticipating future outcomes. 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Qualitative Characteristics of Financial Information Financial information has several qualities that make it useful. These qualities are outlined in Chapter 3 of the Conceptual Framework for Financial Reporting, approved by the International Accounting Standards Board (IASB). The information must be readily understandable to users of the financial statements. The relevant financial information helps the users of the financial statements to take a different economic decision. Materiality is also included as an element of relevance. They are defined as follows: The fundamental qualitative characteristics: Relevance – financial information … Thus, the information should faithfully represent transactions and other events, reflect the underlying substance of events, and prudently represent estimates and uncertainties through proper disclosure. The same should not be misled. For financial decision making, financial information have to be predictive or information, or both. The source of information should be authentic, and the transactions should be represented faithfully. The Fundamental Qualitative Characteristics. This means that information must be clearly presented, with additional information supplied in the supporting footnotes as needed to assist in clarification. Comparability facilitates decision-makers to understand various controllable and non-controllable factors behind the success or failure of the performance of the company. Comparability. The information must be relevant to the needs of the users, which is the case when the information influences their economic decisions. Verifiability – if information can be verified (e.g. In order for the financial statements to be useful to the stakeholders of a business they must embody certain qualitative characteristics. The information must be readily understandable to users of the financial statements. fundamental qualitative characteristics and enhancing qualitative attributes. 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