The paper "Concept of True and Fair View in Auditing and Accounting Practice " is an outstanding example of finance and accounting coursework. “ True and fair” expression is one of the most commonly used expressions in accounting and financial world. Accountants use it to describe the right standard in reporting financial statements as well as to justify the decisions (professional judgment) that require an amount of arbitrary judgment. A wide range of standards including the financial standards and auditing standards use this principle as a guideline in preparation and presentation of the financial statements.
The objective of the financial statements is to report to shareholders on the financial status or position of the organization after a fiscal period. This includes the company performance, tax computations and decision making by management as well as financial institutions. As such, objectivity and independence are paramount in the financial statements. This asserts the importance of a certain kind of measure. This is a major concern for accountants in determining and assuredly of a true and fair of the statements even when there is no precise definition.
Wiley (2010) explains that accountants attribute three very important aspects that must be present in the financial statements for them to reflect the true and fair view. These are; Completeness: no missing documents or dockets in the accounting system of the organization Authority: all transactions are above board and are official Accuracy: all information available is accurate and gives full details Sunder (2010) underpins that for financial statements to be “ true and fair” ; they must reflect and hold the above qualities. However, accountants expect some inherent risk to be present in the financial statements even with the application of the qualities. A true and fair view is the value of an audit.
Unbiased and independent auditors confirm that the claims of an organization of its financial position, and the whole process behind the claim, are true and fair are very important for various reasons. Shareholders, investors, regulators, financial analyst and other users of the financial statement need to know if the financial position of an organization reflects the true occurrences of the operations of the organization as well as if the financial position is fair to all material respect.
For all intents and purposes, “ true and fair” means that, in the opinion of the auditor, the financial statement of an organization offer and reflect the actual financial position of the organization. In essence, true and fair means that the financial statements are not in any way accidentally or deliberately misleading and assumptions made are reasonable. The accounting and auditing environment keeps on changing and therefore a prescriptive approach to this concept may mean a preconceived understanding of the changing circumstances.
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Wiley, I. F. R. S. 2010. found a “true and fair view” requirement that captured this objective. Under revised IAS, 1.