'True and Fair View' stands an utmost importance in the arena of accountancy and auditing. In fact, whole concept of auditing revolves around whether the accounts show true and fair view of the entity or not.
Accounts are prepared in line with the concept of true and fair, where it is to be assured that the books of accounts are-
- prepared using accounting policies applicable during the period
- fulfils regulatory requirements, such as, internal policies of the company and law
- disclose all the facts which are material to the knowledge of investor
In fact, Ind AS or GAAP has given enough flexibility to the management to choose the method of preparation of accounts, so that they can abide by the concept of 'true and fair'.
Since, auditing is an examination of accounts of the company, hence, the auditor has to ensure that the books of accounts give a true and fair view of the operations of the entity of the company.