Essay by PaperNerd ContributorUniversity, Master's August 2001

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ASSIGNMENT Question 1 The companies' act specifies that the financial statement must show a TRUE AND FAIR VIEW. Explain the concept of TRUE AND FAIR VIEW Information must represent faithfully the effect of the of the transactions and other events it either purports to represent or could reasonably be expected to represent. When preparing Accounts, accountants should, always, follow certain rules and regulations, which is abided by the Companies Act 1989. The introduction of the Companies act 1984 marked a radical departure from the approach adopted in previous legislation. For the first time emphasis was placed on the importance of providing information in financial reports to assist in investment decisions. Amongst the major provision of the Act were: the subjections of the profit and loss account to audit: the requirement of group accounts: a considerable extension in the requirements regarding individual items of information which should be disclosed: and most importantly of subsequent developments in company financial reporting, the requirement the auditors report whether financial statements presents a "True and Fair View" of the company's financial position and profitably.

The criterion of a "˜True and Fair view' superseded that of a "˜ True and Correct view" which first appeared in 1844. The Companies act 1948 provided that true and fair view shall over ride all other requirement of the Companies Act as to matters to be included in a company's financial reports. This means the information not specifically required by law must be provided in order to give a true and fair view. Despite in overriding importance the interpretation of the true and fair view has not been without its difficulties.

The opinion of the financial statements states that it will not be true and fair unless the information they contain is sufficient in quantity and quality to satisfy the...