Constraints on Relevant and Reliable Information
Timeliness
If there is undue
delay in the reporting of information it may lose its relevance. Management may
need to balance the relative merits of timely reporting and the provision of
reliable information. To provide information on a timely basis it may often be necessary
to report before all aspects of a transaction or other event are known, thus
impairing reliability. Conversely, if reporting is delayed until all aspects
are known, the information may be highly reliable but of little use to users
who have had to make decisions in the interim. In achieving a balance between
relevance and reliability, the overriding consideration is how best to satisfy
the economic decision-making needs of users
Balance between Benefit and Cost
The balance between benefit and cost is a pervasive constraint rather than a qualitative characteristic. The benefits derived from information should exceed the cost of providing it. The evaluation of benefits and costs is, however, substantially a judgmental process. Furthermore, the costs do not necessarily fall on those users who enjoy the benefits. Benefits may also be enjoyed by users other than those for whom the information is prepared. For example, the provision of further information to lenders may reduce the borrowing costs of an enterprise. For these reasons it is difficult to apply a cost-benefit test in any particular case. Nevertheless, those who set the standards in particular, as well as those who prepare and use financial statements, should be aware of this constraint
Balance between Qualitative Characteristics
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