On 4 June 2014, the FRC published an updated statement on the application of the true and fair view requirement for accounts prepared under IFRS and UK GAAP. BIS and the FRC confirmed, in October 2013, that the current legal framework requires companies to present a true and fair view. Whilst the recent statement is largely based on the FRC's 2011 statement it has been revised to reflect developments in UK GAAP and developments in EU audit legislation. The amendments have been made to address concerns raised in relation to the operation of the true and fair override in IFRS and the removal of the term prudence from the IFRS Conceptual Framework.
FRC confirms that in the majority of cases a true and fair view will be achieved by compliance with accounting standards and by additional disclosure to fully explain an issue. However, where compliance with an accounting standard would result in accounts being so misleading that they would conflict with the objectives of financial statements, the standard should be overridden.
Martin Moore QC's opinion on the "true and fair" requirement is available at:
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