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statement of financial position). To enhance key issues presented in financial reports.
the value of verifiability, confirmation may Additionally, it is also important to
be sought from different knowledgeable note that, ability of users to understand
and independent parties to see whether they accounting information as presented in
reach the same consensus. However, it is not financial reports depend partly, on their
necessary to have a complete agreement capabilities or competencies to understand
FOR ONLINE READING ONLY
that a particular depiction is a faithful basic financial matters and the way they are
representation. Verifiability helps users of displayed in financial reports.
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accounting information to be assured that,
information presented faithfully reflects Cost constraints: is required to consider the
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the business transactions or events being cost and benefit of reporting certain items
examined. in the financial statements. The benefits
of reporting financial information should
Timeliness: captures the general idea that, justify and be greater than the costs imposed
the sooner information is available, the more on supplying such information. When it
useful it is. Delays in financial reporting more is excessively expensive to report certain
than expected may hinder timely access to information in financial statements, the

information by decision makers, and when accounting framework allows a reporting
available it may no longer be useful to solve entity (That is., a business entity in respect
their decision problem. of which financial reports are prepared) to
avoid reporting such information.
Understandability: this underlines the basic
idea that, information should be presented Exercise 1.2

in a way that is readily understandable by 1. How does the financial accounting
users who have reasonable knowledge regulatory system guarantee that
of a business and its economic activities. all stakeholders are well-informed,
Understandability of accounting information standards are upheld, and reports
is more likely to be enhanced when maintain accuracy?
information is classified, characterised and 2. By referring to the accounting
presented clearly and concisely. The use of profession in the context of Tanzania,
tabular or graphic formats may improve the explain the regulatory framework that
understanding of a presented accounting governs the conduct of accounting.

information. Moreover, clarifying some 3. Provide examples of successful
issues for example, the ways in which financial regulation compliance in a
certain financial figures have been derived business context, detailing the tactics
and relationships between them may also employed and the outcomes achieved.
enhance the clarity and understanding of

Student’s Book Form Five
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