Why is verifiability not a component of the proposed notion of faithful representation?
Including verifiability as a component of faithful representation could result in some information being excluded from financial reporting. For example, an entity can faithfully depict a piece of information that represents management’s opinion or intentions and this information may be useful for decision-making. This information may not necessarily be directly or indirectly verifiable. Given this argument, the boards concluded that verifiability is not a component of faithful representation. However, information that is verifiable is generally more decision useful than information that cannot be independently verified; therefore, the boards propose that verifiability should be an enhancing qualitative characteristic.
