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True and Fair Rules

Article Abstract:

True and fair financial reporting is a necessity due to the number of uses and users of the financial reports that there are. The legislature of the United Kingdom has recognized the rights of the shareholder, creditor and wider public which have been reflected in the framework of financial reporting. In the United Kingdom, true and fair reporting has been chosen over company-directed or statutory-required reporting. This reporting is deemed to be the most open and informative. However, it is a higher order and difficult to pin down to working standards. It requires subjective opinions. One of the common criticisms revolves around historical versus current cost accounting as to which presents the more true, more fair picture. Several interpretations of 'true and fair' are presented according to presentation: 1) the objectives of financial reporting, 2) requirements of the law, 3) the effect of inflation and 4) the role of accounting standards. This is a critical matter due to the importance attached to financial reports, and the number of their users.

Financial statements, Administrative responsibility

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True and Fair Rules - Some Australian Observations

Article Abstract:

In Australia, as in the United Kingdom, the test of true and fair is paramount in the preparation and disclosure of financial reports for companies. The Australian equivalent of the Accounting Standards Committee does not have legislative powers though its standards carry force with the accountants in this country. The issue under discussion concerns how disclosure should be carried out if the disclosure results in an untrue or unfair view. If the directors believe a standard does not carry a true and fair view they need to disclose the information with a notation describing how and why this is not a true and fair view. There is the concern that more information will not better inform shareholders and other users. The suggestion that a brief financial report be provided directly with a complete disclosure filed with the Commission and be made available to interested shareholders.

Australia, Disclosure statements (Accounting)

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Inflation Accounting - The Profession's Response to Confusion

Article Abstract:

There is considerable debate in the United Kingdom over current versus historical cost accounting. SSAP No. 16 is under fire. One set of accounts presented as the financial report is not generally sufficient. Many argue that historical cost accounting provides a 'true and fair' viewpoint. It requires judgment and interpretations and more than one 'true and fair' view is a possibility. One can also give two interpretations by using two methods, each offering a different perspective. As an alternative to pronouncing only one method of accounting as presenting a 'true and fair' view, the public should be enlightened about the existence of two and more methods that can provide 'true and fair' reports, but have different perspectives.

Inflation accounting

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