Write short notes on Concept of true and fair view

Auditing and Assurance Revision Questions and Answers

Concept of true and fair view.

The concept of true and fair is a fundamental concept in auditing. The phrase “true and fair” in the auditors‟ report signifies that the auditor is required to express his opinion as to whether the state of affairs and the results of the entity as ascertained him in the course of his audit are truly and fairly represented in the accounts under audit. This requires that auditor should examine the accounts with a view to verify that all assets, liabilities, income and expenses are stated as amounts which are in accordance with accounting principles and policies which are relevant and no material amount, items or transactions has been omitted.
The auditor expresses an opinion that financial statements give a true and fair view when:
 Financial statements are prepared according to applicable Financial Reporting Framework.
 Financial statements have complied with all relevant laws and regulations.
 The books of accounts are arithmetically correct (i.e. arithmetical accuracy)
 The transactions are supported sufficient appropriate evidence.
 The transactions are authorized and approved competent body.
 The transactions are properly classified as capital and revenue.
 The assets and liabilities are neither understated nor overvalued.
 The financial statements are free from misstatements.
 The financial statements disclose all relevant facts.

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