Description
Topic/Case:
In our study of the Conceptual Framework for Financial Reporting (Chapter 2), we noted that Faithful Representation was one of the key qualitative characteristics.
In your report,
- Explain the importance of this characteristic,
- List the elements that make up Faithful Representation and explain their relevance to today’s accounting environment within a business’ operations.
- Explain how it relates to the overall objective of the Conceptual Framework for financial reporting
- With respect to the Enron fraud, give one example where this characteristic was violated.
Format: The assignment length should be 2 to 3 pages, excluding cover page and references, with double spacing.
Explanation & Answer
Attached.
Running head: FAITHFUL REPRESANTATION
Faithful Representation
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State, University
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FAITHFUL REPRESANTATION
2
The Importance of the Characteristic
According to faithful representation, as one of the qualitative attribute of financial
reporting, it is postulated that the financial information reported should report what it is supposed
to represent. Financial information should articulately represent what it is meant to represent.
Faithful representation as an attribute of financial reporting plays a significant role in financial
reporting. One of the roles played by the characteristic is that it ensures that the information
reported is not biased. Through the deployment or embracement of faithful representation, an
organization ensures that financial statements reported the actual state of the financial statements
of the organization.
Additionally, the attribute of financial representation works towards ensuring that the
depicted financial figures are free from error and that the presentation of the financial
information is a fair view of the financial state or performance of the organization. The inception
of the characteristic or attribute of faithful representation aids companies to evade the fraud of
financial reporting. The embracement of the attribute provides a chance or opportunity for the
readers of the financial information to have the same view or ideology of the financial statements
of the corporation or company. Additionally, deployment of faithful representation as one of the
fundamental qualitative attribute of financial reporting, users of the financial information can
access all the required information to comprehend the depicted phenomenon.
Elements of Faithful Representation and their Relevance in the Accounting Option
Various elements make up faithful representation as one of the qualitative attributes of
financial reporting. One of the elements of faithful representation is completeness...
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