Given the information available, explain TWO qualitative characteristics of a general purpose financial reports that the financial statement you have prepared in question (a) lacked. [Refer to May 2017 Q4a; MMDA: STMT OF FIN. POSITION ] (4 marks)
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- Comparability since no comparable results were provided in the financial statement. The usefulness would have been enhanced if the budget information was presented alongside the respective actual or previous year’s corresponding figures used.
- Timeliness is also absent since the financial statement relates to 2014 while the accounts are prepared in 2016. The time affect the value of information and the laws of Ghana requires that the accounts should be prepared and submitted not later than six months into 2015.
- Understandability. For the financial statement to be understandable it should contain notes including the disclosure of accounting policies. However, the financial statement prepared does not contain any notes or disclosure in accounting policies therefore it lacks understandability.