If you read the audit report of any company, you studied the phrase 'true and fair view' in auditor's report. I also learned some auditing from a professional CA. It is shame for me that CA made false financial reports according to the need of client. He changed the figures and then seal on it. But, he wrote that his client's financial reports show 'true and fair view'. From this point, I see 'true and fair view', then there is zero importance of true and fair view.
But this 'True and Fair' has not been made for cheater CAs. It has been made for great and honest CAs who investigate everything about the financial report. After this, they write that company's financial reports are showing true and fair view. In beginning, 'correct and pure' phrase is used but after some time, 'true and fair view' phase started. Why? Like cheater CAs, there may be cheater company's managers. When honest CA audits the financial reports, he also thinks that company management is also honest. But, after sometime, he feels that he is auditing a company in which every employee is cheater. So, he had to change his phrase and he had started the phrase 'true and fair'. By using this phrase, he reduces his liability. He has to trust on company's all information. On these information, he says that report is fair but he does not guarantee of its 100% correctness.
There are two main benefits of this phrase :
1. By using true and fair view, CA just checks whether company's shareholders fund is using for earning profit for shareholders or not.
2. Company will trust on CA as its own friend. It does not treat him as detective because CA will just show the weak points of financial position of company. He will not be interested to give benefits to other company by using loopholes.
But this 'True and Fair' has not been made for cheater CAs. It has been made for great and honest CAs who investigate everything about the financial report. After this, they write that company's financial reports are showing true and fair view. In beginning, 'correct and pure' phrase is used but after some time, 'true and fair view' phase started. Why? Like cheater CAs, there may be cheater company's managers. When honest CA audits the financial reports, he also thinks that company management is also honest. But, after sometime, he feels that he is auditing a company in which every employee is cheater. So, he had to change his phrase and he had started the phrase 'true and fair'. By using this phrase, he reduces his liability. He has to trust on company's all information. On these information, he says that report is fair but he does not guarantee of its 100% correctness.
There are two main benefits of this phrase :
1. By using true and fair view, CA just checks whether company's shareholders fund is using for earning profit for shareholders or not.
2. Company will trust on CA as its own friend. It does not treat him as detective because CA will just show the weak points of financial position of company. He will not be interested to give benefits to other company by using loopholes.
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