Name and briefly discuss two fundamental qualitative characteristics of financial information in accordance with the new Conceptual Framework
1. Relevance: Financial information is considered relevant if it has the potential to influence the economic decisions of users. Information is relevant if it is timely, predictive, or confirmatory. For example, information about a company's current performance or future prospects would be considered relevant to investors when making investment decisions.
2. Faithful representation: Financial information should faithfully represent the economic phenomena it purports to represent. This means that information should be complete, neutral, and free from material error. For example, financial statements should accurately reflect the financial position, performance, and cash flows of an entity without bias or distortion. Faithful representation ensures that users can rely on the information to make decisions.