The introduction of IFRS in the UK did not change the fundamental requirement for accounts to give a true and fair view. Indeed, for the avoidance of doubt, the FRC obtained an Opinion from Martin Moore QC in 2008, which confirmed that the true and fair concept remains paramount in the presentation of UK company financial statements, even though the routes by which that requirement is embedded may differ slightly. The Opinion also confirms that fair presentation under IFRS is equivalent to a true and fair view.

In his Opinion, Martin Moore notes, in relation to the gradual shift over time to more detailed accounting standards, that “It does not follow ... that the preparation of financial statements can now be reduced to a mechanistic process of following the relevant standards without the application of objective professional judgement applied to ensure that those statements give a true and fair view, or achieve a fair presentation". This professional judgement is all important. It applies at all stages of preparation of the accounts, for example:

• where there is a choice of accounting policies allowed under accounting standards, ensuring that those selected are appropriate (indeed, under UK GAAP, that they are the most appropriate), taking into account the circumstances of the company (see for example FRS 18 and IAS 8).

• Establishing accounting policies for items not specifically covered by accounting standards or where they are ambiguous. In such circumstances the approach in IAS 8 to consider standards dealing with similar items may be appropriate; however reliance on an approved accounting treatment of a different kind of item will not necessarily give a true and fair view.

• Making judgements, for example about valuation, aimed at giving a true and fair view.

• Not using detailed accounting rules as an excuse for poor accounting.

• Considering what is and what is not material.

• Giving appropriate disclosures even where not specifically required by accounting standards.

• Ensuring that significant information is not obscured by immaterial or irrelevant disclosures (see for example ASB Statement of Principles paragraph 3.29).

• Standing back at the end of the accounts process and making sure the accounts overall do give a true and fair view.

The ASB and APB expect preparers, those charged with governance and auditors always to stand back and ensure that the accounts as a whole do give a true and fair view; to be prepared, albeit in extremely rare circumstances, to consider using the true and fair override; and to ensure that the consideration they give to these matters is evident in their deliberations and documentation. This will help ensure that accounts in the UK continue to demonstrate the high quality that users have come to expect.

Press release