Ever since its introduction in company law on 1844, the 'true and fair view' concept has come under considerable attack. As a result of this attack over the past 10 years or so, in Australia particularly, considerable changes have been made to the provisions of the legislation. These changes have incorporated the 'true and fair' concept, in particular, the use of applicable accounting standards in producing a 'true and fair view' in the financial statements.
Within that period, the legislation has extended from providing legislative backing to the Accounting Standards; to permitting directors not to apply the Standards if in their opinion such application would not give a 'true and fair view'; to requiring compliance with the Accounting standards (and Schedule 5), along with the financial statements to give a 'true and fair view'. If in the directors opinion, compliance with the accounting standards does not give a 'true and fair view', they may add information and explanations in order to do so.
The objectives of this paper are to: review the various literature from the United Kingdom, New Zealand, and Australia, (all of whom have adopted the concept), addressing the meaning of the 'true and fair' concept. As well as, outline the Australian legislative requirements and high light the recent amendments and their future implications for the accounting profession.
It is submitted that no matter how often or how intense the debate is over the meaning of a 'true and fair view', there is never likely to be a consensus of opinion as to its meaning. Nor, to its appropriateness of being used as a bench-mark for financial reporting. The question will always be asked, 'true and fair' to whom. The repercussions of the recent amendment to the legislation making the use of accounting standards mandatory are yet to be determined.