Microsoft Word Document
Leibler (“True and fair view- an imaginary view”) argues “in an ideal world, and with just a little imagination, accounting standards would always produce a true and fair result. But this is not necessarily so in the real world” (p 61).
o What is the problem that Leibler identifies in his paper with respect to the ‘true and fair’ requirement?
o What solutions does Leibler suggest to ensure that reporting entities do a better job at addressing the ‘true and fair’ requirement?
o Show where the directors of Qantas Limited state the financial statements are true and fair.
o A student says, “Investors want profit to be maximised as this will ensure a maximum share price, and so this is ‘true and fair’” Critically reflect on this flawed argument. How would you define ‘true and fair’? Do you see differences between the concept of ‘true’ and the concept of ‘fair’?
Investors want profit to be maximised as this will ensure a maximum share price, and so this is ‘true and fair’
In this sentence, we can find the need of investors- “Investors want profit to be maximised”, which means they are interest in higher profit or return. However, does this mean companies must present any financial reports that show a good performance to drive the increase of share price, of course (obviously) not. Sometimes there is a financial deficit rather than making a fraud surplus statement to cheat investors.
In normal sense of accounting knowledge, a true and fair accounting information should be presented accurately and consistently without any errors, such as error of omission- a transaction that is not recorded, Error of omission -- a transaction that is not recorded, Error of