ACCOUNTING INFORMATION QUALITY

Quality refers to the credibility of the accounting information that is contained in the financial reports and the degree of its benefit to users. In order to achieve this, it must be free from distortion and misleading. Also, it must be prepared in light of a set of legal, directorial, professional, and technical standards in order to achieve the purpose of its use (Alsalim, Amin, & Youssef, 2018). Similarly, Information refers to data that has been properly processed to give full meaning to a user, enabling them to be used in ongoing and future decision-making processes (Mohammed, 2014). Information is defined as a collection of facts that have been organized and processed to provide meaning to users, and it useful in a decision-making activity (Fitriati & Mulyani, 2015). In the same context, Information quality is conceptualized as an intrinsic quality that information itself owns; regardless of situation and context. So, it is supposed that information quality can be evaluated based on an assessment of the information itself (Mai, 2013). Additionally,Gustavsson and Wänström (2009) via (Alshikhi & Abdullah, 2018) defined information quality as the ―ability to satisfy stated and implied needs of the information consumer‖. The customer refers to users.

Accountancy is "the art of communicating financial information about a business entity to users such as shareholders and managers" (Elliott & Elliott, 2017). Accounting is called the language of business, it's an information and measurement system that identifies, records, and communicates relevant, reliable, and comparable information about an organization’s business activities to external and internal users for making better decisions (Wild, Shaw, & Chiappetta, 2014).Accounting information denotes the data collected, measured, summarized, tabulated and presented in the financial statements to enable its users to evaluate and make decisions (Dalal & Nouraddin, 2016). Accounting information is a set of data that is processed to obtain the final product is information; it’s done by the accounting processing. Accounting information must be characterized by a set of characteristics in order to be useful and can be used by external and internal users (Al-Gazwi & Alhiali, 2010).

The accounting information quality refers to the informativeness of reported numbers, the level of disclosure, and the degree of compliance to generally accepted accounting standards (Cascino, Pugliese, Mussolino, & Sansone, 2014). (Kukah, Amidu, & Abor, 2016) They mentioned the accounting information quality refers to the extent to which accounting information accurately reflects the current operating performance of a company and the usefulness of the current figures in predicting the future performance of the firm. As well, (Alsalim et al., 2018) said the quality of accounting information indicates those characteristics that should assign the useful accounting information that is useful for the preparation of financial reports, because of its role in evaluating the quality of information that results from the application of accounting methods. The quality of accounting information refers to the attributes which accounting information should own for satisfying their users' needs.

External users of accounting information are those who do not directly participate in the management and operation of the firm and have limited access to it, and they use the information to assist in the decision-making process. Includes shareholders (investors), customers, lenders, suppliers, regulators, brokers, lawyers, the press and others. Internal users of accounting information are those who participate directly in the management and operation of the firm's, and they use the information to help improve the efficiency and effectiveness of the performance, such as chief executive officer, chief audit executive, chief financial officer, Treasurer, and other executive and managerial-level staff (Alasbahi, 2016).

CONCEPTUAL FRAMEWORK & QUALITATIVE CHARACTERISTICS OF ACCOUNTING INFORMATION

IASB and FASB are working on a joint project to develop a common conceptual framework. Aim to build on and relate to an established body of concepts and objectives, provide a framework for solving new and arising practical problems, improve financial statement users' understanding of and confidence in financial reporting, and increase comparability among companies' financial statements.

A conceptual framework contains three levels (Figure 1 ). The first level identifies the objective of financial reporting—that is, the purpose of financial reporting. The second level provides the qualitative characteristics that make accounting information useful and the elements of financial statement (assets, liabilities, revenues, expenses and so on). The third level identifies the recognition, measurement, and disclosure concepts used in establishing and applying financial accounting standards and the specific concepts to implement the objective. These concepts include assumptions, principles, and a constraint that describe the present reporting environment.

According to FASB and IASB (2010), qualitative characteristics are those attributes that make financial information useful. In other words, the qualitative characteristics of the accounting information imply the quality attributes that accounting information should have in order to be useful to its users'. Qualitative characteristics are considered as a bridge between the objective of financial reporting and the concepts of recognition, disclosure, and measurement.

Qualitative characteristics are either fundamental or enhancing characteristics, according to how they influence the decision-usefulness of information. Apart from classification, every qualitative characteristic contributes to the decision-usefulness of financial reporting information. However, providing useful financial information is limited by a constraint on financial reporting, cost should not exceed the benefits of a reporting practice.

The following is a brief description of the elements of fundamental and enhanced quality mentioned by (Kieso et al., 2013):

• Relevance: capable of making a difference in a decision (because the information has predictive value, confirmatory value, or both).

• Predictive value: helps investors to form their own expectations about the future.

• Confirmatory value: relevant information with confirmatory value helps users to confirm or correct prior expectations.

• Materiality: Is a company-specific aspect of relevance; information is material if omitting it or misstating it could influence decisions that users make on the basis of the reported financial information. Both the nature and/or magnitude of the item(s) to which the information relates must be considered; thus, the relative size and importance of an item must be evaluated. An immaterial item need not be separately disclosed.

• Faithful representation: numbers and descriptions match what really existed or happened. Faithful representation is necessary because a user does not have the means to evaluate the factual content of the information. The information must be complete, neutral, and free of material error.

• Completeness: all the information that is necessary for faithful representation is provided. An omission can cause the information to be false or misleading.

• Neutrality: a company cannot select information to favor one set of interested parties over another. Information presented in financial statements must be unbiased.

• Free from error refers to the information will be more accurate when it's free from error. The faithful representation does not indicate total freedom from error, because the most financial reporting measures involve estimates of different types that incorporate the management’s judgment. Like, determine depreciation expense and bad debt expense.

• Comparability: information that is measured and reported in a similar manner for different companies is considered comparable and enables users to identify the real similarities and differences in economic events between companies. Consistency is a type of comparability and is present when a company applies the same accounting treatment to similar events, from period to period.

• Verifiability: occurs when independent measurers using the same methods, obtain similar results. An example of direct verification is where two independent auditors count the inventory items on hand and arrive at the same physical quantity amount. An example of indirect verification is where two independent auditors compute the ending inventory value by using the FIFO method. Verification here may occur by checking the quantity and costs (inputs) and recalculating the ending inventory (the output).

• Timeliness: having information available to decision-makers before it loses its capacity to influence decisions. Having relevant information available sooner can enhance its capacity to influence decisions.

• Understandability: for information to be useful, there must be a connection (linkage) between users and the decisions they make. This link, understandability, is the quality of information that lets reasonably informed users see its significance. Understandability is enhanced when information is classified, characterized, and presented clearly and concisely.

ROLE OF PROFESSIONAL BODIESIN FORMALIZATIONOF QUALITATIVE CHARACTERISTICS

The final goal of professional organizations is to produce high-quality standards in order to supply useful financial reports (Mohammed, 2017). Professional organizations were concerned with the issuance of standards and the determination of the characteristics related to the quality of accounting information, the most important of these organizations are but not limited: Governmental Accounting Standards Board (GASB), International Public Sector Accounting Standards Board (IPSASB), Australian Accounting Standards Board (AASB), Canadian Institute of Chartered Accountants (CICA), International Accounting Standards Committee (IASC), Accounting Standards Steering Committee -UK (ASSC), Financial Accounting Standard Board (FASB), and International Accounting Standards Board (IASB). From Table 2 , it noted that the characteristics of relevance, understandability, and comparability were accepted by most professional organizations, In addition, to faithful representation, reliability, timeliness, verifiability, and completeness less acceptance.