F8 KNOWLEDGE SUMMARY-SKANS SCHOOL OF ACCOUNTANCY
6
Important Terms
True and Fair presentation
Financial statements are produced by management which give a true and fair view of the entity’s results. The
auditor in reviewing these financial statements gives an opinion on the truth and fairness of them. Although
there is no definition in the International Standards on Auditing of true and fair it is generally considered to have
the following meaning:
True – Information is factual and conforms with reality in that there are no factual errors.
In addition it is
assumed that to be true it must comply with accounting standards and any relevant legislation.
Lastly true
includes data being correctly transferred from accounting records to the financial statements.
Fair – Information is clear, impartial and unbiased, and also reflects plainly the commercial substance of the
transactions of the entity.
Those charged with governance – The person(s) with responsibility for overseeing the strategic direction of the
entity and obligations related to the accountability of the entity. This includes overseeing the financial reporting
process.
Management – The person(s) with executive responsibility for the conduct of the entity’s operations.
In some cases, all of those charged with governance are involved in managing the entity, for example, a small
business where a single owner manages the entity and no one else has a governance role
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