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True and fair view in auditing means that the financial statements are free from material misstatements and faithfully represent the financial performance and position of the entity
TRUE AND FAIR VIEW is one of the most prominent principles of accounting. It suggests that an enterprise should provide a true and fair view about its financial conditions and operating results. The concept of true and fair view does not mean absolute truth about enterprises. Financial statements are a product of managements judgments and estimates. The principle of true and fair view requires comparative truth about the enterprises picture. True and fair view is rather defined operationally; it is thought to be accomplished by complying with all other lower accounting principles.
True and Fair view is:That Financial Statements are free from material misstatement.
In exact language of Auditing:Auditors assure that during their course of Financial Statements Audit, nothing came to their attention from which they could conclude that Financial Statements are Materially Misstated of are bias.
THIS MEAN THE AUDITOR ISSUE UNMODIFIED OPINION AND FIANANCIAL STATEMENT FREE
FROM MATERIAL MISTATEMENT BUT BE CAREFULL THAT AUDITOR RESPONSIBILTIIES
TO OBTAIN A REASONABLE ASSURRANCE
Application of the principal qualitative characteristics such as prudence, substance over form, materiality etc. and of appropriate accounting standards normally results in financial statements that convey what is generally understood as a true and fair view of such information.
Preparation of true and fair financial statements has been expressly recognized as one of the responsibilities of the directors of companies in the corporate law of several countries such as in the Companies Act 2006 in the UK. Auditors must therefore consider whether directors have fulfilled their responsibility for the preparation of true and fair financial statements when providing an audit opinion.
Company law of certain jurisdictions require the auditors to expressly state in their audit report whether in their opinion the financial statements present a true and fair view of the financial performance and position of the entity.
