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Dear Sir:
For the following question, I cannot decide between b & d. Kindly advise.
Regards, Shams
What does the term “fair presentation” mean when applied to a set of financial statements?
a) Assets are stated at their current values in the statement of financial position.
b) The financial statements have been audited by an external auditor and have been issued with and audit report.
c) The financial statements reflect the financial position and performance of an organization, sufficient for users of the accounts to make decision.
d) The financial statements are correct and contain no errors or omissions.The correct answer is (c).
(Obviously we want the statements to be correct (d) but this is nothing to do with the way that they are presented. Most statements will have been audited (but not all – small companies do not have to be audited) but even so, that is dealing more with the accuracy than the way the statements are actually presented.)
The statements should be presented in a way that is easy for someone with a reasonable level of business knowledge to understand.
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