The ‘true and fair’ concept has been a part of English law and central to accounting and auditing practice in the UK for many decades. There has been no statutory definition of ‘true and fair’. The most authoritative statements as to the meaning of ‘true and fair’ have been legal opinions written by Lord Hoffman [sic] and Dame Mary Arden in 1983 and 1984 and by Dame Mary Arden in 1993 (‘the Opinions’). Since those Opinions were written, there have been some significant changes in accounting standards and company law which have led some to question whether the views expressed in those Opinions remain applicable. In these circumstances, the FRC concluded that it would be helpful to its preparers, auditors and users of financial statements if it commissioned a further legal opinion to ascertain whether the approach to ‘true and fair’ taken in the Opinions requires to be revised. The FRC instructed Martin Moore QC and his Opinion is now published on the FRC website.
Martin Moore QC observes in his opinion (at para. 46):
...the true and fair, or fair presentation concept, remains at the heart of the preparation of financial statements. It can aptly be described as an overarching concept which should inform all decisions by the preparers of such statements.
For further information, and the earlier legal opinions of Lord Hoffmann and Lady Justice Arden, see here.
NB: Section 393 of the Companies Act (2006) provides that a company's directors must not approve accounts unless they are satisfied that they give a true and fair view of the company's assets, liabilities, financial position and profit or loss.
Question: Is Martin Moore correct to regard the "true and fair" concept as identical to the concept of "fair presentation"?
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