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July 20, 2011

True and Fair principle remains fundamentally important: FRC

The UK Financial Reporting Council’s (FRC) Accounting Standards Board (ASB) said the true and fair principal is still of fundamental importance under UK GAAP and IFRS rejecting the concerns conveyed by some stakeholders in the recent House of Lords Economic Affairs Committee inquiry into the audit market.

The ASB’s paper, True and Fair, found that the True and Fair principle is not merely a separate add on to accounting standards.

The ASB said as result of compliance with accounting standards there will be a true and fair view, “and disagreement with a particular standard does not, on its own, provide grounds for departing from it”.

“The whole essence of standards is to provide for recognition, measurement, presentation and disclosure for specific aspects of financial reporting in a way that reflects economic reality and hence that provides a true and fair view,” the paper said.

The ASB chairman Roger Marshall added the purpose of the paper is to, “remind both preparers and auditors that the true and fair requirement remains of fundamental importance in both UK GAAP and IFRS”.

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