Concept of true and fair view Essay Example | Topics and Well Written Essays - 500 words

Concept of true and fair view - Essay Example It is perceived to be realized by abiding by all additional minor accounting standards. True and fair view is the rule that is utilized in guidelines ranging from financial standard and auditing to an organization’s law acts. The phrase is applicable to the process an auditor will execute a verdict on the accounting activities of a corporation (Elliot & Elliot 2004, p. 21). The true and fair value concept is significant because it is employed in guaranteeing and examining if accounts indicate the correct business activities. In addition, the true and fair value concept has helped in abolishing mechanical utilization of accounting principles (Arnold, Hope, Southworth & Kirkham 1994, p. 17). The users of the true and fair value concept include auditors and accountants. Both the auditors and accountants use this concept to set down accounting statement whether they are internally-focused management accounts or external financial accounts. Auditors use the concept to design and perform with extreme determination that will help reveal any significant or material misstatements or errors (Friedlob, & Plewa, 1996, p. 67). Firms that utilize the true and fair value concept are those that are registered in the London Stock Exchange, for example, ABB, an international organization dealing in mechanics and primarily in the automation and power technology sectors, and Heathrow Airport Holdings, which operates four airports in Britain (Glautier & Underdown 1994, p. 51). There are a number of issues relating to the true and fair value concept. One, the accounting books should have noted all the business dealings accurately. The concept should record correct business dealings to ensure proper functioning. Two, the accounting books should be made according to the appropriate standards of accounting and have adhered to accountancy principles given by a number of regulatory agencies (Kotter &Cohen 2002, p. 35). This should reflect the adequate accounting standards in finance.