True and fair view
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1. Financial reporting - accounting concepts.
By law financial statements must give a 'true and fair view'.
This phrase is undefined but depends upon both the application of generally accepted accounting principles and the exercise of judgement.
- Responsibilities for True and Fair View
- It's the responsibility of the directors - or equivalent officers - of the company / group / organisation to produce accounts that show a true and fair view.
- The directors can't abdicate or delegate this responsibility, for example to the auditors.
- So, for example, an Annual Report might state:
- "Each of the Directors, whose names and functions are listed in the biographies on pages 68 and 69, confirms that, to the best of their knowledge:
- – the Group and Company financial statements, which have been prepared in accordance with the relevant financial reporting framework, give a true and fair view of the assets, liabilities, financial position and profit of the Group and Company..."
- In addition to the directors' responsibilities, the auditor has a responsibility to form and express an opinion about the truth and fairness of the financial statements, for example:
- "In our opinion:
- – The consolidated financial statements and Company financial statements (the ‘financial statements’) give a true and fair view of the state of the Group’s and of the Company’s affairs as at 30 June [+ Year] and of the Group’s profit and cash flows for the year then ended..."
The extract above is from an unqualified audit opinion.
This means that the auditor positively confirms the truth and fairness, without limitation.
2. Other reporting - environmental concerns.
Similar principles in other reporting contexts.
For example, the true and fair reporting of greenhouse gas emissions under the Greenhouse Gas Protocol.
