A financial reporting framework determines how financial statements are prepared and what information they contain. Qualitative characteristics of accounting information are part of this framework, and are attributes that make the information in the financial statements useful to users.
The most important qualitative characteristics of financial information are as follows:
In order for information in financial statements to be useful users must be able to understand it. It should be noted that the ability to understand the information depends on the characteristics of the user as well as the characteristics of the information, and so understandability must be judged in relation to a particular user.
To have relevance, accounting information must help users evaluate the outcomes of past, present or future events or it must confirm or correct their past evaluations.
Information must be reliable to be useful. This means that it must be free from material error and bias, and faithfully represent what it purports to represent.
One of the most useful aspects of financial statements is the ability the user has to compare information over time and against financial statements of other businesses.
Consistency is closely related to comparability. For accounting information to be comparable it must be presented in a consistent manner both over time, within the business, and between businesses.