What are the fundamental qualitative characteristics of financial reporting?

The fundamental qualitative characteristics of financial reporting are indeed relevance and faithful representation. Relevance refers to the capacity of financial information to influence the economic decisions of users by helping them evaluate past, present, or future events or confirm, or correct their past evaluations. This means that financial information must be pertinent to the decision-making needs of users, providing them with insights about the financial position and performance of the entity.

Faithful representation complements relevance by ensuring that the financial information is a true reflection of the economic phenomena it represents. This characteristic entails completeness, neutrality, and freedom from error. Financial reports must accurately depict the reality of a company's financial status, allowing users to rely on the information presented without bias or distortion.

Together, these two characteristics ensure that the financial information conveys the most meaningful insights to stakeholders, enabling informed economic decisions. The other options include terms that might pertain to attributes of financial reporting but do not encapsulate the core fundamental qualitative characteristics recognized in the financial reporting framework.