AAA – L3 – SA – Q2.10 – True and Fair

Implication 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 free from misstatements

B meaningful presentation and disclosure of information

C complying with ethical standards

D independent

Answer

Explanation:
‘True and fair’ should imply several things. One implication is that the financial statements provide a meaningful presentation and disclosure of information. Being free from misstatements (A) is part of it, but the emphasis is on presentation. Ethical standards (C) and independence (D) relate to the audit process, not the financial statements. Thus, B is the correct answer.

Tags: Audit opinion, Financial Statements, ICAG, True and Fair
Level: Level 3

Topic: Reporting

Uploader: Salamat Hamid