The importance of being fair: An analysis of IFRS regulation and practice – a Comment

Abstract

This paper examines the ‘present fairly’ (PF) requirement in IFRS. There were eight relevant developments from 2005 to 2008, and these are mostly not yet considered in the academic literature. The paper synthesises the resulting regulatory position, especially for UK companies. Contrary to official guidance, it is suggested here that the PF requirement and the conditions for using it as an override in IFRS are not the same as for a true and fair view. Examples of the use of the PF override in practice are critically examined, as is a recent Opinion on PF by legal Counsel. Developments in US regulation make US opposition to a PF override clearer. The implications for financial reporting and for research into it are examined.

Keywords::

• fair presentation
• IFRS

Notes

The author is Professor of Accounting at Royal Holloway, University of London. He is grateful for comments on an earlier draft from David Alexander (University of Birmingham), Jane Davison (Royal Holloway), Lisa Evans (University of Stirling), R.H. Parker (University of Exeter), Christian Stadler (Royal Holloway), Stephen Zeff (Rice University), and to the editor and two referees of this journal. He thanks the following for technical advice on use of the fair presentation override: Peter Holgate (PricewaterhouseCoopers), Robert Overend (Ernst & Young) and Andy Simmonds (Deloitte). He is also grateful for support for research from PricewaterhouseCoopers.

Correspondence should be addressed to: Professor Christopher Nobes, Professor of Accounting, Royal Holloway, University of London, Egham, Surrey, TW20 0EX. E‐mail: [email protected].