True and fair views in the accounts and financial statement

A company's financial statements are required to show a true and fair view. The company's external auditors are also supposed to express an opinion as to whether the accounts do in fact show such a view. If the accounts appear to be in order, then an unqualified opinion is given.

If the accounts do not show a true and fair view, the auditors are supposed to render an adverse opinion. This is used where the auditors are reasonably sure that the accounts are incorrect. Where the information and documents available are insufficient for the auditors to ascertain whether the accounts are correct or incorrect, then the auditors are required to express an disclaimer opinion.

To protect the auditors from defamation lawsuits in relation to such opinions, section 208 of the Companies Act provides them with qualified privilege. This means that unless there is malice or some improper motive of the auditors in making incorrect statements, the auditors will win any defamation lawsuits against them.