January 29, 2022


Accounting + Finance Blog

True and Fair View (Fair Presentation) Concept in Auditing

True and Fair View (Fair Presentation) Concept in Auditing

The concept of a true and fair view or fair presentation applies to the audit report. The auditor must make an opinion in the report as to if the financial statement is true and fair. Also, an audit opinion is valid if and only if material errors and undue bias are reduced in the financial reports of an entity. What are these terms? Let’s explain.

Definition of True and Fair View

1. True and fair view means that the auditor will state its opinion as to whether the financial statements are free from material misstatements and bias.
2. According to a source, the auditor is expected to report on “whether or not the financial statements give a true and fair view, or present fairly, the financial position of the entity as at the end of the financial period and the performance of the entity during the period.”

Key Explanations

Note that in the legal term, true and fair has no definition.

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Definition of True. True implies that the financial statements (FS) are free from material error or misstatements. This doesn’t mean that the FS is free from all errors. Certain errors may still exist in the statements. The auditor, when examining the financial reports will carry out some tests especially on estimates to ensure that errors that will distort users’ reliance on its reports are discovered and corrected.

Definition of Fair. A financial statement is fair if it is free from undue bias. An audit report is fair if it considers all stakeholders involved. Here, the auditor does not favor particular stakeholders to the detriment of others. For example, the company directors may be seeking loans from a financial institution.

To successfully get the loan, the directors have adjusted a specific judgment in the financial statement. Furthermore, the directors had informed the auditor regarding the judgment and the purpose for it. If the auditor complies, he has failed in his duty of fairness.

Fair presentation. The term true and fair view can be interchange with the fair presentation if the local standards and laws permit it. In Nigeria, both terms are used by auditors.

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Other things you should know about the fair presentation

Although the auditor is expected to ensure errors and undue bias are not in the financial statement, he or she does not guarantee or certify that the financial statement is correct in its entirety.

However, the auditor is allowed to exercise his judgment on the reports prepared by the directors. This judgment will lead to him writing in the audit report as to whether or not the FS shows a true and fair view or fair presentation of the state of affairs of the entity.


“True and fair view”, also called fair presentation, can be used interchangeably. The term suggests that auditors must give an opinion in the audit report. He or she does so after concluding that the financial statements are free from material error and undue bias. However, using the phrase does not mean that these statements are correct.