The true and fair view and the drafting of the Fourth Directive

Abstract

The article reviews the drafting of the Fourth Directive with a view to analysing the mechanisms whereby the overriding requirement that accounts should provide a true and fair view of the state of affairs of a company was introduced into the second draft of the directive. It examines the published comments from the expert group which wrote the initial discussion document and from the European Parliament and the Economic and Social Committee. It concludes that, since the initial concept was that the Directive should combine elements from existing member state statutes rather than create an independent approach, it should be expected that UK and Irish law would have an influence once these countries became members. There is, however, evidence that some accountants in the UK placed emphasis on the true and fair override as a means of escaping what they saw as the strictures of the Fourth Directive.