(A)

(i) Faithful representation
Useful financial information must be a faithful representation of the economic and other phenomena that it purports to represent. Faithful representation is attained when the depiction of the phenomenon is complete, neutral, and free from material error. Information that faithfully represents an economic or other phenomenon depicts the substance of the underlying transaction, other event, activity or circumstance—which is not necessarily always the same as its legal form (that is substance-over-form). In the scenario, donations from local companies and international organisations to support the fight against a viral outbreak including several boxes of face masks, handwashing stations, and sanitizers were not disclosed in the financial statements. This is a case of omission of information from the financial management which renders the information unfaithfully represented.

(ii) Comparability
Comparability is the quality of information that enables users to identify similarities in, and differences between, two sets of phenomena. Comparability is not a quality of an individual item of information, but rather a quality of the relationship between two or more items of information. Note that comparability is different from consistency and it is different from uniformity. In this scenario, the department has included a column for budget information in the statement of financial performance, along with comparative figures. This enhances the comparability of the financial information.

(iii) Faithful representation
Faithful representation is attained when the depiction of the phenomenon is complete, neutral, and free from material error. Information that faithfully represents an economic or other phenomenon depicts the substance of the underlying transaction, other event, activity or circumstance. In the scenario, the department reported its heritage assets in the financial statement at an estimated amount without any evidence of valuation. This lack of evidence undermines the reliability of the information, rendering it unfaithfully represented.

(iv) Timeliness
Timeliness means having information available for users before it loses its capacity to be useful for accountability and decision-making purposes. Having relevant information available sooner can enhance its usefulness as input to assessments of accountability and its capacity to inform and influence decisions that need to be made. A lack of timeliness can render information less useful. Under the Public Financial Management Act, Public sector entities are required to present and publish their financial reports 2 months after the end of the year. The central government is mandated to publish public accounts within 3 months after the end of the financial year. In this scenario, the financial statements for the 2023 financial year were issued for publication on 5th June 2021. There is a delay in the release of the information despite the improvement over previous years. Therefore, the quality of the information is adversely affected by the delay in reporting.

(v) Faithful representation
Faithful representation is attained when the depiction of the phenomenon is complete, neutral, and free from material error. Information that faithfully represents an economic or other phenomenon depicts the substance of the underlying transaction, other event, activity or circumstance. In the scenario, there were changes in accounting policies within the department during the year, which the director of the department confirms were made to enhance the financial performance of the department. The change in accounting policy should be based on a desired objective of the preparers, but on its capacity to enhance the usefulness of the information to the users. In this case the preparers are biased in the choice of accounting policy and therefore cannot be said to be neutral.

   (B) GPFR does not include every information due to some pervasive constraints, including materiality, cost-benefit, balance       between the qualitative characteristics.

• Materiality
  Information is material if its omission or misstatement could influence the discharge of accountability by the entity or the decision that users make on the basis of information provided in the GPFR. Materiality depends on both the nature and amount of items judged in the particular circumstances. It is not possible to have a uniform quantitative threshold at which a particular type of information becomes material. Assessment of what is material should reflect: legislations, institutional and operational environment, preparer’s knowledge and expectation about the future.
  In standard setting, materiality is considered in making standards application of accounting policy, basis of preparation and disclosure of a particular item or type of information. Reporting entities should also consider the materiality of application of a particular accounting policy and separate disclosure of items.
• Cost-benefit
  Financial reporting imposes costs. The benefits of financial reporting should justify those costs. Assessing whether the benefits of providing information justify the related costs is often a matter of judgment, because it is often not possible to identify and/or quantify all the costs and all the benefits of information included in GPFRs.
  On the other hand, the users also incur some cost. Users incur the costs of analysis and interpretation. Omission of useful information also imposes costs, including the costs that users incur to obtain needed information from other sources and the costs that result from making decisions using incomplete data provided by GPFRs.
  Benefits of financial reporting are also enormous, both the users and preparers benefit. Users reap the majority of benefits from the information provided by GPFRs. However, information prepared for GPFRs may also be used internally by management and result in better decision making by management.
  Application of the cost-benefit constraint involves assessing whether the benefits of reporting information are likely to justify the costs incurred to provide and use the information. When making this assessment, it is necessary to consider whether one or more qualitative characteristic might be sacrificed to some degree to reduce cost.
• Balance between the qualitative characteristics
  The qualitative characteristics work together to contribute to the usefulness of information. For example, neither a depiction that faithfully represents an irrelevant phenomenon, nor a depiction that unfaithfully represents a relevant phenomenon, results in useful information. Similarly, to be relevant, information must be timely and understandable.
  In some cases, a balancing or trade-off between qualitative characteristics may be necessary to achieve the objectives of financial reporting. The relative importance of the qualitative characteristics in each situation is a matter of professional judgment. The aim is to achieve an appropriate balance among the characteristics in order to meet the objectives of fin