Essay: Reliability of Accounting Information

Essay: Reliability of Accounting Information
June 8, 2011 Comments Off on Essay: Reliability of Accounting Information Academic Papers on Business Studies,Sample Academic Papers admin

Sample Essay

The reliability of accounting information means that it does not have any errors or biases and is presented faithfully with honest intentions. The reliability of accounting information is dependent on several other qualitative elements such as neutrality, verifiability and faithfulness. Reliability does not imply that accounting information cannot or should not influence human behaviour but entails that the presentation of this information should be free from influences and biases. The objective of reliability in accounting information then is to present true and fair information to stakeholders who make critical decisions based on this information (Nikolai, Bazley and Jones 2009).

There are several advantages of reliability in accounting information which include image building of company as a fair entity and the level of responsibility of accountants. If the accounting information is reliable stakeholders can make an informed and useful decision which is an added strength of reliability. Another advantage of reliability in accounting information is that the company can avail loans much easier and the government may also award incentives on the basis of reliability and fair presentation. The reliability of accounting information is verified by accountants but there are certain problems with the role of the auditor as to who will ensure the faithfulness of the auditor and chances of fraud are present which is a big weakness of reliability.

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