The act requires that the accounts show give a true
and fair view. This means that when they are prepared they must be prepared
giving full recognition to all the relevant accounting principles and the
requirements of the statutory reporting framework. This is the responsibility
of the directors.
In the event that compliance with the law meant
that the accounts did not show a true and fair view s 396 has the answer:
that the accounts did not show a true and fair view s 396 has the answer:
1)
If
compliance with the regulations, and any other provisions made by or under this
act as to the matters to be included in a company’s individual accounts or in
notes to those accounts, would not be sufficient to give a true and fair view,
the necessary additional information must be given in the accounts or in a note
to them.
If
compliance with the regulations, and any other provisions made by or under this
act as to the matters to be included in a company’s individual accounts or in
notes to those accounts, would not be sufficient to give a true and fair view,
the necessary additional information must be given in the accounts or in a note
to them.
2)
If in
special circumstances compliance with any of those provisions is inconsistent
with the requirements to give a true and fair view, the directors must depart
from that provision to the extent necessary to give a true and fair view.
Particulars of any such departure, the reasons for it and its effect must be
given in a note to the accounts.
If in
special circumstances compliance with any of those provisions is inconsistent
with the requirements to give a true and fair view, the directors must depart
from that provision to the extent necessary to give a true and fair view.
Particulars of any such departure, the reasons for it and its effect must be
given in a note to the accounts.
In other words this, admittedly somewhat nebulous
concept of a ‘true and fair view’ takes precedence over the strict legal
requirements of the reporting rules. However this so-called ‘true and fair’ override
is not a license for non-compliance and it should be used only in exceptional
circumstances and with a full explanation.
concept of a ‘true and fair view’ takes precedence over the strict legal
requirements of the reporting rules. However this so-called ‘true and fair’ override
is not a license for non-compliance and it should be used only in exceptional
circumstances and with a full explanation.