AA – L2 – SA – Q5.10 – True and Fair

Meaning of ‘true and fair’ in financial statements.

Question

Which one of the following should be implied by the term ‘true and fair’ when applied to financial statements?

A Independent

B Free from misstatements

C Meaningful presentation and disclosure of information

D Complying with ethical standards

Answer

Explanation:
The term ‘true and fair’ in financial statements implies that they provide a meaningful presentation and disclosure of information, fairly reflecting the entity’s financial position and performance. While being free from misstatements (B) is relevant, ‘true and fair’ emphasizes clarity and relevance of presentation. Independence (A) and ethical standards (D) relate to the audit process, not the financial statements. Option C is correct.

Tags: Audit opinion, Financial Statements, ICAG, True and Fair
Level: Level 2

Topic: Completion Procedures and Reporting

Uploader: Salamat Hamid