True and Fair from the Accountants' Perspective

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Recommended: Controversy of fair value accounting

“From the accountants’ perspective, what does ‘true and fair’ mean? In your opinion, is the true and fair requirements useful, or necessary?”
Accounting is the measurement procedure and communication of financial information (Needles and Powers 2013) that allows companies to report on the economic performance of their business. It is these reports which bring the concept of ‘true and fair’ into play. True and fair is a central concept related with the use of Financial Reporting Standards and the conceptual framework in keeping financial reports standardized and reliable for the users, namely shareholders and investors (Waqas 2013). Fair value accounting as viewed by a large percentage of specialists and academics has been considered a ‘revolutionary approach’ to support shareholders throughout the decision making process as it represents the current market value of an economic asset or liability (Kaya 2013). Although some have applauded the power of true and fair value, contenders have highlighted the substantial absence of consistency, thus valuing historical cost as a complete structure built of solid foundations.
‘True’ relates to the reliability and the consistency of information enclosed within financial reports. The truthfulness indicates that all the figures and numbers quoted are precise or close to being accurate based upon the financial reporter’s understanding of the situation (Miller & Bahnson 2007). Numbers are generally rounded to make the reporting of the financial positions uncomplicated, yet these numbers must be by and largely spot-on. They do not solely include cash transactions but also the value of assets (REFERNCE).
According to the International Financial Reporting Standard (IFRS) 13 ‘fair value’ is def...

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...hnson P R, 2007,’Refining Fair Value Measurement’ Journal of Accountancy vol 204 Issue 5 p.30-6 (accessed 22-03-14)
McCollum T, 2009,’IASB Amends Fair-value requirements’ International Auditor April 2009 Vol.66 Issue 2, p14 (accessed 22-03-14)
Needles B E, Powers M 2013,’Principles of Financial Accounting’ Financial Accounting Series 12th edition, Cengage Learning (Accessed 19-03-14)
Penman S H, 2007,’Financial reporting quality: is fair value a plus or minus?’ Accounting & Business Research (Wolters Kluwer UK) Special Issue p.33-43
Skoda M, 2012,’How Appraisers Develop Fair Value’ Annals of the University of Petrosani Economics 2012 vol.12 issue 2, p.273-284
Waqas A, 2013, ‘Analysis of Factors Present in Financial Reporting Standards Leading to Manipulate True & Fair View of an Entity’s Financial Statements’ Social Science Electronic Publishing 2014, KPMG p.1

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