Finance Leasing Manual - FLM48.05

Companies Act 1985: 'true and fair view' requirement

Another foundation of the authority of ASB standards is the requirement in Sections 226-227 Companies Act 1985 (as amended) that accounts must give a 'true and fair view' of the state of affairs of the company and, if appropriate, the group of which it is part. There is eminent legal authority for the view that a company will not normally meet the 'true and fair view' requirement unless it observes the relevant accounting standards issued by the ASB. This is contained in an Opinion of Mary Arden QC (now Mrs Justice Arden) given on 21 April 1993 and reproduced as part of the introduction to the annual volume Accounting Standards, published by The Institute of Chartered Accountants in England and Wales.