En el caso de delito continuado, la pena podrá aumentarse hasta por una mitad más de la que resulte aplicable

Professional bodies in several countries (including the US and the UK), as well as the IASB, have highlighted decision-usefulness as the main objective of financial reporting. In 1971, the American Institute of Certified Public Accountants (AICPA) formed the Trueblood Committee which subsequently published its definitive, “Trueblood Report”

describing the basic objectives of financial reporting as providing: “information on which to base economic decisions” (Belkaoui, 2004, p. 169). However, the objective of providing useful information to help investor and creditor decision-making did not actually appear in AICPA pronouncements until the Accounting Principles Board (APB) released Statement No. 4 in 1964 focusing on the use of accounting information for decision-making rather than the traditional purpose of stewardship. This represented a fundamental change in attitude in setting financial accounting objectives (Anton, 1976).

The US Financial Accounting Standards Board (FASB) followed the APB example and adopted decision usefulness in its Statements of Financial Accounting Concepts No.1 issued in 1978; this document stated that the objectives of financial reporting are to:

“...provide information that is useful to present and potential investors and creditors and other users in making rational investment, credit and similar decisions. The information should be comprehensible to those who have a reasonable understanding of business and economic activities and are willing to study the information with reasonable diligence” (FASB, 1978, p.

5).

The FASB published its second concept statement in 1980, entitled “Qualitative Characteristics of Accounting Information”; this documented the characteristics that could make accounting information “useful” to interested users. The statement viewed the characteristics as a “hierarchy of accounting qualities”, which form the basis for selecting and evaluating information to be included in corporate financial reports. Understandability featured at the top of the hierarchy as the key quality for accounting information to possess in order to be considered decision-useful. FASB No.2 identified the other primary determinants of accounting information quality as relevance and reliability; these were considered key in making accounting information useful for decision-making (Bonham et al. 2004).

Interest in the decision-usefulness approach in the UK was not far behind US levels. The Accounting Standards Steering Committee (ASSC) adopted decision-usefulness in 1975 when it published its “Corporate Report” which suggested that the main objective of accounting information was to focus on helping users in their decision-making. The report has influenced several later studies in the financial reporting field that attempted to set out a decision usefulness framework for accounting in the UK (Son et al. 2006). This was particularly evident in the statement of principles issued by UK’s Accounting Standards Board in 1999, while referred to provision of:

“information about the reporting entity’s financial performance and financial position that is useful to a wide range of users for assessing the stewardship of the entity’s management and for making economic decisions” ASB (1999, Chapter 1).

The International Accounting Standards Committee (IASC)⁵⁴ also adopted decision-usefulness in its Framework for the Preparation and Presentation of Financial Statements published in September 1989. The IASC stated that the objective of financial reporting was:

“To provide information about the financial position, performance and changes in financial position of an enterprise that is useful to a wide range of users in making economic decisions” (IASC, 1989, paragraphs, 22-23).

The IASC argued that the quality of accounting information could be enhanced by focusing on the qualitative characteristics of financial statements from a decision-usefulness perspective. In this context, the IASC highlighted four principal qualitative characteristics which make the accounting information presented in financial statements useful to the users (IASC, 1989, paragraphs 24). These characteristics, understandability, relevance, reliability and comparability, are summarised in Table 4.2.

54 IASs were issued between 1973 and 2001 by the Board of the IASC. On April 1, 2001 the new IASB took over responsibility for issuing IASs. The IASB has continued to develop standards, now termed IFRS (Nobes, 2008).

Table 4.2: IASC Qualitative Characteristics of Financial Statements

Adopted from: IASC Framework for the Preparation and Presentation of Financial Statements (1989, paragraph. 24-42).

Recently the IASB restated the existing frameworks’ decision-usefulness based definition of the objective of financial statements in its preliminary views on an improved conceptual framework for financial reporting, published in July 2006 as a joint project between the IASB and the FASB. In this context, it was argued that financial reporting should:

“... provide information that is useful to present and potential investors and creditors and others in making investment, credit and similar resource allocation decisions” (IASB, 2006, p.12).

Characteristic Explanation

Understandability Information provided in financial statements should be readily understandable by users who are assumed to have a reasonable knowledge of business and economic activities and accounting and a willingness to study the information with reasonable diligence.

Relevance To be useful, information must be relevant to the decision-making needs of users. Information has the quality of relevance when it influences the economic decisions of users by helping them evaluate past, present or future events or confirming, or correcting, their past evaluations. The relevance of information is affected by its nature and materiality. Information is material if its omission or misstatement could influence the economic decisions of users. Materiality provides a threshold or cut-off point rather than being a primary qualitative characteristic which information must have if it is to be useful.

Reliability Information has the quality of reliability when it is free from material error and bias and can be depended upon by users to represent faithfully that which it either purports to represent or could reasonably be expected to represent. A balance sheet should represent faithfully the transactions and other events that result in assets, liabilities and equity of the entity at the reporting date which meet the recognition criteria.

Comparability Users must be able to compare the financial statements of an entity through time in order to identify trends in its financial position and performance. Users must also be able to compare the financial statements of different entities in order to evaluate their relative financial position, performance and changes in financial position. Hence, the measurement and display of the financial effect of similar transactions and other events must be carried out in a consistent way within and between entities and over time.

Two years later, in May 2008, the IASB and FASB issued a further Exposure Draft on the objective of financial reporting and qualitative characteristics of financial reporting information (FASB, 2008). The boards reaffirmed that the objective of financial reporting was:

“... to provide financial information about the reporting entity that is useful to present and potential equity investors, lenders and other creditors in making decisions in their capacity as capital providers” (FASB, 2008, p. 1).

In September 2010, the IASB issued its Conceptual Framework for Financial Reporting (The IFRS Framework) (IASB, 2010). The overall aim of financial reporting was noted as being to: provide information for “present and potential investors, lenders and other creditors” (paragraph. OB2); as with the prior framework, the IFRS framework focused on the decision usefulness of financial information for those:

“Who [investors, lenders and other creditors] use that information to make decisions about buying, selling or holding equity or debt instruments and providing or settling loans or other forms of credit” (paragraph OB2).

The Ministry of Commerce and Industry issued a Ministerial Resolution (No. 18) in 1990 obligating companies operating in Kuwait to adhere the IAS and other IASB requirements when preparing their financial statements⁵⁵ (see Chapter Two).