True and fair view - what it means

Financial statements are required to show a true and fair view. But what do the words "true and fair view" mean?

There is no definition in the Singapore Companies Act. Neither are the words defined in the United Kingdom's companies legislation. The relevant accounting standards bodies have also not defined these words.

Queen's Counsels Mary Arden and Leonard Hoffman (as he then was) in England (who are senior well respected lawyers) stated that the words require that the accounts will not be true and fair unless the information in them is sufficient both in quantity and quality to satisfy the reasonable expectations of readers to whom the accounts are addressed. Unfortunately, these words do not assist in any meaningful way.

In the English case of Lloyd Cheyham v Littlejohn, the judge stated that compliance with the rules of the relevant accounting standards authority is strong evidence as to the proper standard to be adopted.

This case was referred to in the local case of JSI Shipping (S) Pte Ltd v Teofoongwonglcloong (a firm) [2007] 4 SLR 460; [2007] SGCA 40

(for a discussion of this case from the viewpoint of the law of negligence, please see http://professionalnegligencesg.blogspot.com/2009/04/gaelic-inns-jsi-shipping-2-contributory.html)