5 The characteristics of ‘good’ information
Have you ever seen a set of published accounts for a company? If you haven’t or, even if you have, take a look at some now. (They are often called the annual report.)
A large range of information is available online at your fingertips. Some of it is useful, most of it is not. Accountants are increasingly having to deal with growing quantities of information and many are having to search for relevant information as part of their jobs. Some of these activities are designed to develop your skills of searching for information, identifying relevant and useful information and filtering out the rest. These are key skills for accountants and ones that will become increasingly more important. Some activities may feel long and repetitive, but remember that you are learning how to do something that is really only learnt through practice. Do your best to persevere and spend the recommended time on the exercise. If you can't, return to it later and, over the course of reading this course, do your best to spend the suggested time on the longer activities. It will be worth the pain of getting used to it!
Go to the website. Spend at least 30 minutes looking at some of the annual reports of the companies it contains. In particular, try to find one that includes something called a ‘balance sheet’.
Do you think what you've been looking at is ‘good’ information? Why/why not? Take five minutes to write down your thoughts.
It would be ‘good’ if you found it useful. Did you? Probably not. It didn't meet any need you had other than to fulfil the request I made that you look for it.
To be ‘good’ from an accounting perspective, information must be useful. That is, it must serve a purpose. Information must be useful to someone or it is not worth producing it. What other characteristics do you think information needs to have before it can be considered ‘good’?
Let’s consider an example. Imagine that you decided you wanted to extend your knowledge of accounting beyond this course, and decided to buy a copy of Business Accounting 1 by Frank Wood and Alan Sangster. You want the book in the next week, but unfortunately, your local bookshop has none in stock. Your bookshop manager tells you that they could order one, but that it would take three weeks before the bookshop would have it for you. When you explain that you want it urgently, the manager gives you the phone number of another bookshop five miles away, together with the correct area code. You phone the other bookshop. It has a copy in stock and you are able to go there and purchase it that day.
Was the telephone number ‘good’ information? Why/why not?
You probably noticed that a number of things tell you that it was ‘good’:
You received the phone number quickly and when you needed it. In other words, the information was timely.
It was directly useful in the context of your problem – that is, it was relevant.
It was complete – you were given the entire telephone number that you needed in order to get through to the the bookshop.
It was accurate – the number was correct.
These are some of the more important aspects of information that make it ‘good’.
Now, let’s consider something else. Without organisations – whether they are profit-seeking businesses, charities, universities, clubs, churches, or any other type of organisation you can think of – accounting would not have much of a role to play. Why do organisations such as profit-seeking businesses exist?