ACCA Strategic Business Reporting (SBR) Practice Exam

Which of the following is NOT an enhancing qualitative characteristic?

1. Verifiability

2. Timeliness

3. Relevance

4. Understandability

The correct answer is: Relevance

In the context of financial reporting, the enhancing qualitative characteristics are those attributes that help enhance the fundamental qualities of relevance and faithful representation. The key enhancing characteristics include comparability, verifiability, timeliness, and understandability. Relevance, on the other hand, is considered one of the fundamental qualitative characteristics of useful financial information. It pertains to the capacity of financial information to make a difference in users' decisions by helping them assess past, present, or future events. Thus, identifying relevance as not an enhancing characteristic is correct because it plays a foundational role, while the other options listed are indeed enhancing characteristics that support the usefulness of relevant and faithfully represented information. Verifiability allows users to confirm that information faithfully represents the phenomenon it purports to depict. Timeliness ensures that information is available to decision-makers in time to influence their decisions, and understandability ensures that financial information is clear and comprehensible to users who have a reasonable knowledge of business and economic activities.