Verifiability Concept


Verifiability means that the accounting information presented in financial statements must be verifiable by independent accountants.


Accounting information presented in the financial statements is considered verifiable if two independent accountants (e.g. auditors) can reasonably conclude on the basis of their verification that it is a fair reflection of the underlying transactions and circumstances.

Verification of accounting information can be either direct or in-direct.


Accounting InformationDirect VerificationIn-Direct Verification
Cash in handCash count at the year end.
DepreciationRecalculation based on the rate of depreciation and assets' net book value.
InventoryStock count at the year end to verify quantity.Recalculation of the value of inventory to confirm the correct application of the valuation method (e.g. FIFO, AVCO, etc.)


Verifiability helps to assure users that the financial statements are a true and fair representation of the underlying transactions. If the information contained in the financial statements is not verifiable, the users would have no sound basis to place trust in the information.

In some cases it is necessary to disclose forward-looking information in the financial statements that is not currently verifiable but is of relevance to users. An example of such information is the accounting and disclosure of a pending legal dispute. It is important in such instances to disclose all necessary assumptions, methods and context relating to such information in order to facilitate the users in their assessment of its reliability.

Verifiability is not a fundamental qualitative characteristic but is a highly desirable one.