Virtual Kollage: The qualities of a good accounting report

Posted by / Saturday, 30 April 2016 / No comments

The qualities of a good accounting report


DATA AND INFORMATION
Data can be defined as a raw fact that are yet to processed into information.




Information can be defined as a processed data. It is a data that has been processed so as to be meaningful to the user(s). A good accounting information should have certain qualities as explained below.

QUALITIES OF GOOD ACCOUNTING INFORMATION

Accuracy
Any good accounting information should be accurate. Information is said to be accurate if it does not contain any material error. A material error is an error that can affect management decision.

Completeness
Accounting information should contain all the relevant facts required for management decision.

Comparability
The information prepared during a particular year should be capable of being compared to information of a different year prepared by the same company. This will be possible and easier if there is consistency in the use of accounting policies. Also, information prepared by a firm should be comparable to that prepared by a different firm if they use the same accounting policies.

Cost beneficial
This means, the benefit derived from getting or preparing the information should be more the cost incurred in getting or preparing the information.

Understandability
The information prepared by the accountant should be clearly understood by the users.

Relevance
Financial information is relevant if it has the ability to influence the economic decisions of users. It must have predictive or confirmatory value. Predictive value assists users to evaluate past, present or future events. Confirmatory value helps users to confirm or correct past evaluations. Note that by highlighting unusual transactions in the accounts predictability is enhanced.

Reliability
Reliable information is one that is free from material error and bias. Information is free from bias if it is not provided for the interest of one person or few group of persons.

Timeliness
Information should be provided on time. That is, it should be provided as and when management need it. Information that is too late is as bad as that which is too early.
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NB: You can use the acronym, ‘’ACCCURRAT’’ to memorize the above points

SAMPLE QUESTIONS
1. State and explain any five good qualities of accounting information.

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