What is Relevant information

What is relevant information

Relevance is the information which is fundamental to decision making.

How relevance is determined

Relevance is one of the important qualitative aspects of financial statements that require that information relevant to economic decision should be disclosed in the financial statements. Materiality is a very important factor of determining the relevance of information.

What is materiality?

Information is said to be material if its non disclosure can influence the decision making of the user. Information may be material for one user and may not be material for other because different user has to make different decisions.

How we determine the materiality

Materiality is determined by two factor i.e. size and nature. It is important to note that amount can be material due to its size, nature or both.

Does financial statement disclose all relevant information?

It is technically not possible to disclose and describe all relevant information in the financial statement. However, financial statement must disclose all information that can influence the decision making of the user i.e. material information.