The ‘true and fair view’ concept is one of two competing but not mutually exclusive legal
standards for financial reporting quality that have been subject to debate on their meaning,
use and importance. The other is ‘present fairly in conformity with generally accepted
accounting principles’ (GAAP). While the former is closely identified with judgement and is
used in the United Kingdom, the European Union, Singapore, Australia, and New Zealand,
the latter is the standard for United States financial reporting and tends to be more rule
This paper presents the findings of an empirical investigation of the ‘true and fair view’ in New
Zealand. It reports the results of a survey of financial directors, auditors and shareholders of
New Zealand listed companies investigating their perceptions of, and preferences for, ‘true
and fair view’ versus other standards for financial statement reporting including ‘present fairly
in conformity with generally accepted accounting principles’ (GAAP), 'fairly reflects' and
'present fairly', and compares the findings with relevant international research.
The purpose of the research was twofold; firstly to determine if ‘within-group’ and ‘betweengroup’
differences in perceptions and preferences for the terms existed, thus contributing to
an expectations gap; and, secondly, to examine whether or not the New Zealand respondents
shared the preference for ‘true and fair view’ versus ‘present fairly in conformity with GAAP’
found in previous international research.
The results show that a clear majority of all three groups share similar perceptions of the
meaning of the 'true and fair view’ concept, and support its use in financial reporting. All
groups preferred ‘true and fair view’ to other terms including ‘fairly present in conformity with
GAAP’, a result consistent with previous comparisons of United Kingdom, and United States
investors’ opinions. This illustrates that the 'true and fair view' concept remains an important
international overall standard for financial reporting quality.