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Perceptions of the true and fair view concept: an empirical investigation

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  • Ngaire Kirk

Abstract

If major groups of financial reporting participants differ in their perceptions of standards for financial reporting quality, such as ‘true and fair view’, ‘present fairly’ and ‘fair presentation’, a financial reporting expectation gap may occur. This article reports the results of a survey designed to explore this potential gap by determining New Zealand financial directors’, auditors’ and shareholders’ perceptions of terms associated with financial reporting quality. The results show that a clear majority of all three groups share similar perceptions of the ‘true and fair view’; but perceive ‘true and fair view’ to be quite different from ‘fairly presents’ and ‘fair presentation’, terms the New Zealand Institute of Chartered Accountants’ (2005) describes as equivalent to ‘true and fair view’. Thus there appears to be a perception gap between the respondents surveyed and the Institute. The findings also support a literal rather than a technical interpretation of ‘true and fair view’; that respondents do not perceive ‘true and fair view’ as compliance with GAAP; and that ‘true’ (‘truth’ in accounting), the word separating ‘true and fair view’ from terms that include only ‘fair’, may be perceived as a key factor required for financial reporting quality.

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  • Ngaire Kirk, 2006. "Perceptions of the true and fair view concept: an empirical investigation," Abacus, Accounting Foundation, University of Sydney, vol. 42(2), pages 205-235, June.
    • Handle: RePEc:bla:abacus:v:42:y:2006:i:2:p:205-235
    DOI: 10.1111/j.1467-6281.2006.00198.x
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    References listed on IDEAS

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    1. Stephen Zeff, 1993. "International accounting principles and auditing standards," European Accounting Review, Taylor & Francis Journals, vol. 2(2), pages 403-410.
    2. Gilad Livne & Maureen McNichols, 2009. "An Empirical Investigation of the True and Fair Override in the United Kingdom," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 36(1‐2), pages 1-30, January.
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    1. Costel Istrate & Bogdan Robu Ioan, 2014. "L'Analyse De L'Influence Des Composants Des Etats Financiers Sur La Capitalisation Boursière Des Entreprises Roumaines, Dans Les Conditions De La Crise," Post-Print hal-01899159, HAL.
    2. Kettunen, Jaana, 2017. "Interlingual translation of the International Financial Reporting Standards as institutional work," Accounting, Organizations and Society, Elsevier, vol. 56(C), pages 38-54.
    3. Tomi Rajala, 2019. "Mind the Information Expectation Gap," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 10(1), pages 104-125, March.
    4. Claudia Catalina CIOCAN & Iuliana GEORGESCU & Mihai CARP, 2020. "The Perception of the Representatives of the Accounting Profession from Romania on the Relationship Between Conservatism and True and Fair View," The Audit Financiar journal, Chamber of Financial Auditors of Romania, vol. 18(159), pages 585-585.
    5. Necmi K. Avkiran & Direnç K. Kanol & Barry Oliver & Tom Smith, 2016. "Knowledge of campaign finance regulation reduces perceptions of corruption," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 56(4), pages 961-984, December.
    6. Anne Marie Garvey & Laura Parte & Bridget McNally & José Antonio Gonzalo-Angulo, 2021. "True and Fair Override: Accounting Expert Opinions, Explanations from Behavioural Theories, and Discussions for Sustainability Accounting," Sustainability, MDPI, vol. 13(4), pages 1-23, February.
    7. Gilad Livne & Maureen McNichols, 2009. "An Empirical Investigation of the True and Fair Override in the United Kingdom," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 36(1‐2), pages 1-30, January.
    8. Guilherme Belloque & Martina K Linnenluecke & Mauricio Marrone & Abhay K Singh & Rui Xue, 2021. "55 years of Abacus: Evolution of Research Streams and Future Research Directions," Abacus, Accounting Foundation, University of Sydney, vol. 57(3), pages 593-618, September.
    9. Vladu Alina Beattrice & Matis Dumitru, 2012. "Importance And Vulnerability Of True And Fair View In The Romanian Accounting Environment -Case Study," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 972-977, July.

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