Understandability

1. Financial reporting - conceptual framework - qualitative characteristics.

In financial reporting under the conceptual framework, understandability is considered to be one of the "enhancing" qualitative characteristics, that further improves the usefulness of financial information that has already achieved both of the fundamental qualitative characteristics of being relevant and faithfully represented.

Reasonably informed & diligent users

"Classifying, characterising and presenting information clearly and concisely makes it understandable.

While some phenomena are inherently complex and cannot be made easy to understand, to exclude such information would make financial reports incomplete and potentially misleading.

Financial reports are prepared for users who have a reasonable knowledge of business and economic activities and who review and analyse the information with diligence."

Conceptual framework for financial reporting - IASB.

2. Financial markets - other contexts.

Similar characteristics of information in financial markets more broadly, and in other contexts.

See also

• Accounting concepts
• Accounting reference date
• Comparability
• Conceptual framework
• Economics
• Faithful representation
• Financial reporting
• International Accounting Standards
• International Accounting Standards Board (IASB)
• International Financial Reporting Standards (IFRS)
• Neutrality
• Prudence
• Qualitative characteristics of useful financial information
• Relevance
• Substance over form
• Timeliness
• True and fair view
• Useful financial information
• Verifiability

External links

• Conceptual framework for financial reporting - IAS Plus
• IFRS Conceptual Framework Project Summary 2018