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<br />Definitions of Oualitative Characteristics of Accounting Information: <br /> <br />· Bias - Bias in measurement is the tendency of a measure to fall more often on <br />one side than the other of what it represents instead of being equally likely to <br />fall on either side. Bias in accounting measures means a tendency to be <br />consistently too high or too low. Financial reporting will strive to eliminate <br />bias in accounting measures. <br /> <br />· Comparability - The quality of information that enables users to identify <br />similarities in and differences between two sets of economic phenomena. <br /> <br />· Completeness - The inclusion in reported information of everything material <br />that is necessary for faithful representation. <br /> <br />· Conservatism - A prudent reaction to uncertainty to try to insure that <br />uncertainty and risks inherent in financial situations are adequately <br />considered. <br /> <br />· Consistency - Conformity from period to period with unchanging policies and <br />procedures. <br /> <br />· Feedback Value - The quality of information that enables users to confirm or <br />correct prior expectations. <br /> <br />· Materiality - The magnitude of an omission or misstatement of accounting <br />information that, in light of surrounding circumstances, makes it probable that <br />the judgment of a reasonable person relying on the information would have <br />been changed or influenced by the omission or misstatement. <br /> <br />· Neutrality - Absence in reported information of bias intended to attain a <br />predetermined result or to induce a particular mode of behavior. <br /> <br />· Predictive Val ue - The quality of information that helps users to increase the <br />likelihood of correctly forecasting the outcome of past or present events. <br /> <br />· Relevance - The capacity of infonuation to make a difference in a decision by <br />helping users to form predictions about the outcomes of past, present, and <br />future events or to confirm or correct pri or expectations. <br /> <br />· Reliability - The quality of information that assures that information is <br />reasonably free from error and bias and faithfully represents what it purports <br />to present. <br /> <br />· Representational Faithfulness - Correspondence or agreement between a <br />measure or description and the phenomenon that it purports to represent <br />(sometimes called validity). <br /> <br />City of San Marcos Financial Policy - Revised April 2004 <br /> <br />Page 13 <br />