Analysis of factors affecting a true and fair view in accounting

Abstract

The highest objective of accounting in a market economy is to give a true and fair view of the business’s economic reality. The true and fair view is the result of the correct application of generally accepted accounting principles and established accounting procedures, which is inextricably linked to the application of ethical principles in activities of accountant experts. By applying generally accepted accounting principles in the accounting policy of the accounting entity, it is possible to achieve true and fair view of the accounting entity’s economic reality or it is possible to obscure and embellish the entity’s unfavourable situation or intentionally aggravate the entity's situation by a suitable application of accounting principles. Based on the legislative definition of the true and fair view principle, the article identifies and analyses the factors acting to achieve and examine the true and fair view both during the accounting period and in the preparation of financial statements. The article also clarifies the responsibility of the subjects involved in achieving and examining the true and fair view.