FINANCIAL ACCOUNTING AND REPORTING

a) Intracomparability or horizontal comparability. The example given in number 1 above is

horizontal comparability or within the same organization

b) Intercomparability or dimensional comparability– is done between and among different

enterprises. If I want to compare the performance of all banks in the Philippines in terms of
their loan portfolio, I have to dig into their Audited Financial Statements and make interviews
with their top management. Comparably, intercomparability is more difficult to achieve that
intracomparability.

2. Verifiability – an in formation is verifiable in the sense that it is supported by evidence

so that when another person will look into it and make his own computations using the
same methods, he will arrive at the same amount. Verifiability means that different
knowledgeable and independent observers could reach an agreement or a consensus
that a particular depiction is a faithful representation.

3. Timeliness –“Aanhin pa ang damo kung patay na ang kabayo?” or “Timeliness is next to
Godliness”. Simply put, timeliness means that financial information should be made
available to the users on time to influence their decisions. What happened in the past
would become the basis of what would happen in the future.

Example of Timeliness :
If the annual stockholders’ meeting is scheduled on April 15, annual audit reports should
be distributed as early as the first week of first of March to give the stockholders ample time
to review the financial and other information. During annual stockholders’ meetings, major
decisions are made to formulate the policies for future plans. The financial statements play a
major role in this decision-making exercise.

4. Understandability – understandability relies on two factors, quality of the information

and quality of the user. Even though the information is well presented, it will be useless
if the user does not understand it.

*Classifying, characterizing and presenting information clearly and concisely makes it

understandable (par 2.24, Conceptual Framework). For information to be useful, it must be
adapted to the users’ range of knowledge and understanding.