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Unit 10: IFRS and its Relevance

process, regulators or others – and be indicative of the qualities that users can expect of the Notes
financial information provided to them.
For the purposes of this Statement:

Comparability: Comparability means that quality of financial information which exists
when users of that information are able to discern and evaluate similarities in, and
differences between, the nature and effects of transactions and events, at one time and over
time, either when assessing aspects of a single reporting entity or of a number of reporting
entities;
Materiality Test: Materiality test means that test which is used to assess the extent to
which relevant and reliable information may be omitted, misstated or not disclosed
separately without having the potential to adversely affect the decisions about the
allocation of scarce resources made by users of a general purpose financial report or the
rendering of accountability by preparers;
Relevance: Relevance means that quality of financial information which exists when that
information influences decisions by users about the allocation of scarce resources by:
helping them form predictions about the outcomes of past, present or future events;
and/or

confirming or correcting their past evaluations; and which enables users to assess
the rendering of accountability by preparers;
Reliability: Reliability means that quality of financial information which exists when that
information can be depended upon to represent faithfully, and without bias or undue
error, the transactions or events that either it purports to represent or could reasonably be
expected to represent; and

Understandability: Understandability means that quality of financial information which
exists when users of that information are able to comprehend its meaning.
General purpose financial reporting involves making decisions about the selection of financial
information to be included in general purpose financial reports, the measurement of that
information and its presentation. These decisions should be consistent with the objective of
general purpose financial reporting and should yield information which possesses the qualitative
characteristics set out in this Statement.

Notes Benefits of IFRS
The following points explain the benefits of using IFRS:
It would benefit the economy by increasing growth of international business
It would encourage international investing and thereby lead to more foreign capital
inflows into the country.
Investors want the information that is more relevant, reliable, timely and comparable
across the jurisdictions.
IFRS would enhance the comparability between financial statements of various
companies across the globe.
Better understanding of financial statements would benefit investors who wish to
invest outside their own country.
Contd...

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