Abstract: The aim of this paper is to analyse matters of truth, which is inherent issue of accounting (and therefore in reporting, as its part), which is reflected in the true and fair principle (TFV). The paper demonstrates the essence of the TFV principle and the evolution of its role and place among the set of qualitative characteristics of financial statements. After examining the changes in the development of the perception of TFV the paper makes an appraisal, gives the author’s comments and contribution by providing direct implications for regulators and the setters of standards. With respect to typical limitations regarding behavioural studies, the paper provides practical as well as social implications about understanding of the TFV concept and its effect on both the preparers and users of financial statement
<a href="https://dx.doi.org/10.15611/fins.2018.4.06">DOI: 10.15611/fins.2018.4.06</a>
<p>Keywords: true and fair view concept (TFV), truth in accounting, truth in reporting, quality characteristics of
financial statements.</p>
<h2>1. Introduction</h2>
<p>In the literature the TFV concept was presented as the parent and overriding accounting assumption/principle. The
principles themselves, especially in accounting, mean fundamental truths [Byrne 1937] or general law and rules adopted
as a guide to action [May 1937]. According to accounting research studies, accounting reports should disclose that
which is necessary to make them not misleading [Sprouse, Moonitz 1962]. It is common to state that accounting has
three main underlying principles. These are justice, truth and fairness [Moonitz 1961]. In that sense justice is
perceived as equitable treatment to all interests involved in the financial situation covered by the accounts, truth
means that accounts must not be made a means of misrepresentation, and fairness reflects the fact that accounting
rules and procedures should not serve a special interest. Finally, the accounting general objective, as stated in APB
4 [Accounting Principle Board’s…], is to provide reliable information about the economic resources and obligations of
a business enterprise in order to evaluate its strengths and weaknesses, show its financing and investment, evaluate
its ability to meets its commitments and show its resources base for growth. </p>
<p>This paper utilized the literature review, analysis of changes in legal requirements, and comparative analysis.
Finally, it defined the trends in TFV perception and evaluated their importance. </p>
<p>This paper aims to systematise, in a chronological order, changes in the perception of TFV over the years as well as
to analyse the evolution of TFV recognition in the legal acts on accounting, both in Poland and selected international
regulations. Secondly, the paper aims to present and interpret research conducted on those preparing and using
financial statements, on truth in reporting and the role of TFV within accounting principles. The author also came to
conclusion that we are able to determine an essential change in the perception (in the literature and in legal acts)
of TFV’s importance. These changes were visible especially in the last decade. Finally, an appraisal was made of the
changes, which were already implemented as well as an evaluation of the existing trends in this area. These
assessments are then the starting point to indicate normative guidelines, so that the article contributes to the
discussion on the directions of the further development of pivotal accounting principles.</p>
<p>The remainder of the paper is organized as follows. Section 2 discusses the background of the TFV concept and
explains the meaning of the word ‘true’. Sections 3 and 4 present the ‘truth’ concept in philosophy and its
implementation into accounting. Section 5 contains experimental results, summary and conclusions, especially related
to emerging markets (including those which are EU members) such as Poland. </p>
<h2>2. ‘True’ and ‘fair’ perception in accounting</h2>
<p>There are numerous discussions about whether accounting needs any kind of principles, and what the word ‘principle’
means. While some pretend to define it as some kind of natural truth which helps to present the real picture of an
entity in its financial statement [Byrne 1937] or the general rule treated as the basis of conduct or practice [May
1937; Hendriksen, Breda 1992]. Others point out that the word ‘principle’ itself refers to natural sciences.
Accounting arrangements are man-made and there is no one right way of proceeding, therefore they ought to be seen as a
convenient way of doing things and should rather be replaced by the word ‘standard’ [Nolan 1972]. According to Putman,
objects of accounting do not exist independently of a conceptual scheme that relates accounting concepts to each other
and to their empirical referents and they do not exist independently of the human mind. But this does not mean that
such objects are not real [Putnam 1981]. Consequently, he claims that the objects of accounting are part of an
economic reality that is socially (intersubjectively) constructed and objectified by the virtue of collective
intentionality (but only to the extent that such collective intentionality actually exists). Moreover, some contend
that there is no room for any kind of principles in accounting since there are no conceptual frameworks in the social
sciences [Seidler 1984].</p>
<p>Despite different opinions on the principles in accounting, it is generally accepted that one of the most important
assumptions is the true and fair view principle. Before presenting the TFV concept it is worth becoming acquainted
with the meaning of the words ‘true’ and ‘fair’. According to dictionary definitions ‘true’ means as an adjective in
agreement with fact/ faithful to another or others, or to a cause or allegiance, genuine, sincere, accurate, correct
and as adverb accurately while ‘fair’ is explained as an adjective according to the rules, complete, thorough and as
an adverb according to the rules, squarely [Webster Dictionary]. The most relevant meanings for these two words used
so widely in accounting is as ‘in agreement with fact’ or ‘in an accurate manner’ for ‘true’ and ‘agreeing with what
is thought to be right or acceptable’ or ‘in a direct and honest way’ for ‘fair’. </p>
<p>Being aware of TFV, one needs to know what were the roots of implementing that concept into the accounting world. It
is absolutely clear that the intention was a willingness to reveal only the pure ‘truth’ in accounting and financial
statements (which are supposed to be its most fruitful element). But there immediately arises a question about a
meaning of ‘truth’. The answer is not so simple since this problem has been discussed for hundreds of years on the
grounds of philosophy and religion. There are several authors who have performed a synthetic presentation of different
approaches for ‘truth’ [Popkin, Stroll 1993; Ajdukiewicz 1983; Ajdukiewicz 2004; Kotarbiński 1961; Tarski 1970] and
can be divided into classical and non-classical definitions. It was Aristotle who first formulated classical (per se)
definition. His formula was ‘To say of what is that it is not, or of what is not that it is, is false, while to say of
what is that it is, or of what is not that it is not, is true’. Aristotle’s concept is the standard version of the
corresponding theory of truth, which says that the truth of a sentence consists in its agreement with reality. On the
other hand, there are non-classic definitions based on relativism [Austin 1950; David 1994; Smid 2014], which
generally state that truth depends on some final criterion (more detailed in [Tarski 1933; Tarski 1949; David 1994;
Davidson 1990 Kirkham 1992; van Hulle 1997; Piechocka-Kałużna 2014; Küne 2003]). Summarizing the reflections on truth,
the most appropriate approach, from the accounting point of view, is based on Popper idea of verisimilitude [Popper
1972; Kueth 2005; Tichy 1974; Rescher 1973] that assumes that one can speak of better or worse approximations to the
truth rather than absolute truth itself. </p>
<h2>3. TFV’s evolution</h2>
<p>The TFV concept originated in the United Kingdom, considered to be a strong-hold of principles-based accounting and
the cradle of the true and fair view override. The UK Companies Act of 1948 required that published annual reports
should do two things, namely: (a) present a true and fair view of the state of affairs and the results, and (b) follow
any relevant detailed legal requirements (of which there were relatively few at that time). Further, it explicitly
made clear that if doing (b) was inconsistent with doing (a), then (a) was more important. In other words, (a) can
override (b). Thus, if a requirement of the Act would not lead, in a particular situation, to a true and fair view,
then that requirement must (not may) not be followed. No definition was or has ever legally been offered of a ‘true
and fair view’ [Alexander, Jermakowicz 2006]. Today one may state that true and fair is not something that is merely a
separate add--on to accounting standards [Milanov 2002; Nobes 2000]. Instead the whole essence of standards is to
provide for recognition, measurement, presentation and disclosure for specific aspects of financial reporting in a way
that reflects economic reality and hence that provides a true and fair view [FRC 2014].</p>
<p>The implementation of the TFV legal requirement in the EU Member States was complicated by differences in their legal
and accounting systems, as well as by translation challenges. Article 2(3-5) of the Fourth Directive was transposed
into the national legal systems of the EU Member States in different ways. </p>
<p>In the US the TFV concept was not adopted into the regulatory system. It was rather an independent auditor whose
report contains an opinion as to whether the financial statements present fairly, in all material respects, an
entity’s financial position, the results of operations and cash flows in conformity with GAAP. In the 1990s there was
a standard [The AICPA SAS 69] that explained the meaning of a fair presentation as a state in which:</p>
<ul>
<li>the accounting principles selected and applied have general acceptance;</li>
<li>the accounting principles are appropriate in the circumstances;</li>
<li>the financial statements, including the related notes, are informative of matters that may affect their use,
understanding, and interpretation;</li>
<li>the information presented in the financial statements is classified and summarized in a reasonable manner, that
is, neither too detailed not too condensed;</li>
<li>the financial statements reflect the underlying transactions and events in a manner that presents the financial
position, results of operations, and cash flows stated within a range of acceptable limits, that is, limits that are
reasonable and practicable to attain in financial statements.</li>
</ul>
<p>The Chairman of the FASB (R. Herz), believes that the US may also support a move towards a more principles-based
system, feeling that standards have become too complex and too detailed with too many rules emanating from too many
bodies. Therefore, according to D. Tweedie (former IASB chairman) a convergence process is an attempt to develop a
single set of high-quality standards that can be used internationally, improving the consistency and quality of
financial reporting worldwide. </p>
<p>The most difficult issues that the standard setters have to resolve in the convergence between the US GAAP and IFRS
include a consolidation policy and the use of fair value as a measurement attribute [Flower 2004; Schipper 2005]. Some
authors indicate two other challenges – accounting for financial instruments and performance reporting – which are
linked to the use of fair value [Whittington 2005]. </p>
<p>It is worth mentioning that currently one may hold disagreement within the International Accounting Standards (IAS)
and the International Financial Reporting Standards (IFRS) which means to depart from uncritical, restrictive (and
even orthodox) understanding of TFV as an absolute and irrevocable principle. The most obvious manifestation of such a
trend is the change of the IAS/IFRS Conceptual Framework, which previously included TFV as an underlying assumption
(par. 46) but as of 2010 it was replaced by the fundamental qualitative characteristics, relevance and faithful
representation. There is another change that may be perceived in the same vein. The revised conceptual framework does
not contain the assumption of prudence. The explanation for this is probably inconsistent with the principle of
neutrality. Moreover, there is also materiality that seems to be a significant limitation for reporting under the
previous version of Conceptual Framework. Theoretically the Conceptual Framework is not binding on the EU market since
it is not implemented by the appropriate EU Commission resolution. However, one must not ignore them as it is IAS /
IFRS with their conceptual basis that set new trends within the accounting world. In particular, they show the
interesting, from this paper’s point of view, and a symptomatic tendency – disappearance of the use of the words
‘truth’ and ‘true’. Was this an intended change in the overall shape of the framework whose general purpose [Nobes,
Stadler 2014] is to assist the board (standard setter) when setting accounting standards? The paper highlights the
importance of the so-called qualitative characteristics of financial statements. Besides TFV, the International
Financial Reporting Standards (IFRS) mention utility, relevance and faithful representation. This was done, in
particular, looking through the prism of the development of their location in the conceptual framework for the IFRS
regulations and Polish Accounting Act. </p>
<p>Wherever and how frameworks were implemented, there still remains the unanswered question about truth and its
reflection in financial reporting. Therefore the author formulated the following hypothesis:</p>
<p>H: There is no truth in financial reporting due to the existence of the TFV principle and its unclear application.
</p>
<p>The question that first arises is how to define ‘truth’ in financial reporting. The truth in accounting is defined
variously and frequently indirectly. Namely, it is often characterized by employing more or less corresponding terms.
According to the US FASB’s Statement of Accounting Concepts No. 2 [FASB, 1980], representational faithfulness is the
‘correspondence or agreement between a measure or description and the phenomenon that it purports to represent’.
According to the EU approach it is important to note that there are three possible views concerning the true and fair
concept. These are (1) it has no meaning, and no effective existence, (2) it is important, as a catch-all addition to
detailed regulations and (3) it is important as an addition to, and if necessary an overriding alternative to,
detailed regulation [Alexander, Jermakowicz 2006]. </p>
<p>Since in the case of the TFV concept it is so important to strive for the most accurate reflection of reality, in
cases of defining truth in accounting one may use Popper’s theory, who stated that there are no general criteria by
which we can recognize truth – except perhaps tautological truth – there are something like criteria of progress
towards the truth [Popper 1972]. </p>
<p>The process of the implementation of the TFV concept into the accounting environment depends largely on the type of
the accounting regulatory framework. Generally it is common to divide these systems as principle-based and rule-based
accounting. Principles-based accounting is used as a conceptual basis for accountants. A simple set of key objectives
are set out to ensure good reporting. Common examples are provided as guidance and explain the objectives. Although
some rules are unavoidable, the guidelines or rules set are not meant to be used for every situation. The fundamental
advantage of principles-based accounting is that its broad guidelines can be practical for a variety of circumstances.
Precise requirements can sometimes compel managers to manipulate the statements to fit what is compulsory. The problem
with principles-based guidelines is that the lack of guidelines can produce unreliable and inconsistent information
that makes it difficult to compare one organization to another. On the other hand, rules-based accounting is basically
a list of detailed rules that must be followed when preparing financial statements. Many accountants favour the
prospect of using rules-based standards, because in the absence of rules they could be brought to court if their
judgments of the financial statements were incorrect. When there are strict rules that need to be followed, the
possibility of lawsuits is diminished. Having a set of rules can increase accuracy and reduce the ambiguity, which can
trigger aggressive reporting decisions by management. The complexity of rules, however, can cause unnecessary
complexity in the preparation of financial statements [Alexander, Jermakowicz 2006].</p>
<p>To sum up, one may say that the TFV concept is most important under the IASB and EU legal requirements. While in the
US, a fair presentation achieved exclusively through adherence to GAAP and TFV override is not applicable. Therefore
historically, countries that adopted IFRS, including the EU Member States, are perceived as more principle-based,
while the US was rather identified as following rule-based systems. Besides, the implementation of the new EU
Directive imposes the TFV override on European markets. </p>
<p>Based on the studies on IAS / IFRS which became a requirement for EU entities, there still exists the opposite trend
– which means departure from TFV. Having in mind the revised IFRB Conceptual Framework, one needs to observe the
noticeable shift from TFV towards utility that is defined by ‘relevance’ and ‘faithful representation’. In other
words, it is usefulness that is the main objective of a financial statement and everything else (even including
truth?) must be subordinated to that goal. Therefore replacing TFV by relevance may result in misinterpreting the
economic phenomena presented in the reports. </p>
<h2>4. Methodology description and results</h2>
<p>To test the hypothesis as stated above the author performed an experimental research that comprised of
questionnaires, individual intensive interviews, directed interviews, and made telephone calls which is an acceptable
form of experiment in the accounting area [e.g. Holmes, Marriott, Randal 2012 or Libby, Bloomfield, Nelson 2002]. From
that perspective such an experiment may provide insights into the overall perception of accounting assumptions,
including the TFV principle. Experimental methods allow researchers to manipulate variables of interest as well as
control negligible factors. Subsequently one can measure the intervening processes and mental states that affect the
final outcomes [Greener 2008]. According to prior research, successful financial accounting experiments use the
comparative advantages of the experimental approach to determine how, when and why important features of financial
accounting settings influence behaviour [Bloomfield, Nelson 2002]. </p>
<p>The author designed and conducted two experiments (experiment 1 and experiment 2). Experiment 1 <a
id="Zakotwiczenie" />consisted of conducting surveys among auditors between September and November 2012. First, the
author solicited auditors attending local obligatory training courses designed for certified public auditors (CPAs).
The anonymous questionnaire included only two open non-evaluative questions, which were designed in line to
fundamental theory [Charmaz 2006]. The questions were: (1) ‘What is truth in accounting for you?’ and (2) ‘Can one say
that accounting reflects the truth? If not, please explain why’. Then, encouraged by the relatively high response rate
(40 questionnaires received from the 41 participants), experiment I was extended onto further groups of auditors
participating in the obligatory training. The results received from subsequent training courses were far fewer than
those from the first CPA training (28 questionnaires of 320 CPAs). Nevertheless, the author finally received 68
responses from CPAs, And later executed the same survey among academics. The author selected 258 respondents
representing the accounting departments of the most renowned universities, sending them (using dedicated anonymous
e-mails) questionnaires, of which 26 were completed and returned [Piechocka-Kałużna 2014]. </p>
<p>Based on the results from 94 questionnaires (68 from CPAs and 26 from academics) the author come to the unexpected
conclusion that according to the respondents there is no truth in accounting. There was only 1 CPA who confirmed that
accounting reflects the truth. The respondents’ comments on the ‘truth’ in financial statements were then amplified
through: </p>
<ul>
<li>individual intensive interviews with accountants (22 respondents) and auditors (20 respondents) and </li>
<li>directed interview method which meant individual interviews with auditors <br />(14 respondents) and group
interviews with auditors (44 respondents) [Piechocka--Kałużna et al. 2015]. </li>
</ul>
<p>These interviews were originally devoted to implementing IFRSs and their perception related to truth in general, and
to the TFV override in particular. The most frequently indicated reason was the potential opportunity (or rather risk)
of misusing the sense of TFV. Summarizing the outcomes there appeared an unanticipated and sad conclusion that truth,
in the eye of different groups of people associated somehow with financial reports, in fact does not exist.</p>
<p>Analysing the results received from experiment 1 as well as other research [Sikorska 2007], the author designed the
experiment 2 that was conducted between September 2016 and March 2017. The key question stated during this second
phase of research was whether participants accept the TFV override within accounting fundamental assumptions. The
research sample for the second experiment consisted of 625 participants, included:</p>
<ul>
<li>81 CPAs of which 32 was interviewed during the Christmas meeting and <br />49 during 2016 obligatory training
sessions dedicated to CPAs,</li>
<li>428 accountants – interlocutors of telephone call encouraging for professional training for accounting firms,</li>
<li>116 undergraduate students of ‘Finance and Accounting’ interviewed using the directed interview method.</li>
</ul>
<p><span>Table 1. </span>Experiment 1 participants</p>
<table id="table-1" class="table table-bordered">
<colgroup>
<col />
<col />
<col />
<col />
</colgroup>
<thead>
<tr>
<td>
<p>No</p>
</td>
<td>
<p>Type of research</p>
</td>
<td>
<p>Respondents</p>
</td>
<td>
<p>Number <br />of respondents </p>
</td>
</tr>
</thead>
<tbody>
<tr>
<td>
<p>1</p>
</td>
<td>
<p>Intensive interviews:</p>
</td>
<td>
<p> </p>
</td>
<td>
<p>42</p>
</td>
</tr>
<tr>
<td>
<p>1.1</p>
</td>
<td>
<ul>
<li>individual interviews with accountants</li>
</ul>
</td>
<td>
<p>Accountants </p>
</td>
<td>
<p>22</p>
</td>
</tr>
<tr>
<td>
<p>1.2</p>
</td>
<td>
<ul>
<li>individual interviews with auditors</li>
</ul>
</td>
<td>
<p>Auditors </p>
</td>
<td>
<p>20</p>
</td>
</tr>
<tr>
<td>
<p>2</p>
</td>
<td>
<p>Directed interviews:</p>
</td>
<td>
<p> </p>
</td>
<td>
<p>58</p>
</td>
</tr>
<tr>
<td>
<p>2.1</p>
</td>
<td>
<ul>
<li>individual interviews with auditors</li>
</ul>
</td>
<td>
<p>Selected auditors attending the conference to mark 20th anniversary of the Regional Branch of the National
Chamber of Statutory Auditors in the Wielkopolska province</p>
</td>
<td>
<p>14</p>
</td>
</tr>
<tr>
<td>
<p>2.2</p>
</td>
<td>
<ul>
<li>group interviews with auditors</li>
</ul>
</td>
<td>
<p>Selected auditors participating in obligatory training courses organised by the National Chamber of Statutory
Auditors in Poznań</p>
</td>
<td>
<p>44</p>
</td>
</tr>
<tr>
<td>
<p>3</p>
</td>
<td>
<p>Questionnaires, including:</p>
</td>
<td>
<p> </p>
</td>
<td>
<p>94</p>
</td>
</tr>
<tr>
<td>
<p>3.1</p>
</td>
<td>
<ul>
<li>completed by auditors (paper questionnaire)</li>
</ul>
</td>
<td>
<p>Auditors participating in obligatory training organised by the National Chamber of Statutory Auditors in
Poznań</p>
</td>
<td>
<p>68</p>
</td>
</tr>
<tr>
<td>
<p>3.2</p>
</td>
<td>
<ul>
<li>completed by researchers dealing with accounting (online questionnaire)</li>
</ul>
</td>
<td>
<p>Researchers working in higher education institutions</p>
</td>
<td>
<p>26</p>
</td>
</tr>
</tbody>
</table>
<p></p>
<p>Source: own study based on research conducted between September and November 2012.</p>
<p><span>Table 2. </span>Experiment 2 – participants</p>
<table id="table-2" class="table table-bordered">
<colgroup>
<col />
<col />
<col />
<col />
<col />
<col />
<col />
</colgroup>
<tbody>
<tr>
<td>
<p>No</p>
</td>
<td>
<p>Type of research</p>
</td>
<td>
<p>Respondents</p>
</td>
<td>
<p>Number of respondents </p>
</td>
<td>
<p>Number of respondents agreeing TFV override</p>
</td>
<td>
<p>Number of respondents disagreeing TFV override</p>
</td>
<td>
<p>Number of respondents who are neutral</p>
</td>
</tr>
<tr>
<td>
<p>1</p>
</td>
<td>
<p>Directed interviews:</p>
</td>
<td>
<p> </p>
</td>
<td>
<p>625</p>
</td>
<td>
<p>66</p>
</td>
<td>
<p>450</p>
</td>
<td>
<p>109</p>
</td>
</tr>
<tr>
<td>
<p>1.1</p>
</td>
<td>
<ul>
<li>individual interviews with auditors</li>
</ul>
</td>
<td>
<p>Selected auditors attending the Christmas meeting of the Regional Branch of the National Chamber of Statutory
Auditors in the Wielkopolska province</p>
</td>
<td>
<p>32</p>
</td>
<td>
<p>3</p>
</td>
<td>
<p>27</p>
</td>
<td>
<p>2</p>
</td>
</tr>
<tr>
<td>
<p>1.2</p>
</td>
<td>
<ul>
<li>individual interviews with auditors</li>
</ul>
</td>
<td>
<p>Selected auditors participating in obligatory training courses organised by the National Chamber of Statutory
Auditors in Poznań</p>
</td>
<td>
<p>49</p>
</td>
<td>
<p>7</p>
</td>
<td>
<p>41</p>
</td>
<td>
<p>1</p>
</td>
</tr>
<tr>
<td>
<p>1.3</p>
</td>
<td>
<ul>
<li>individual interviews with accountants</li>
</ul>
</td>
<td>
<p>Accountants interviewed during telephone call encouraging for professional training for accounting firms</p>
</td>
<td>
<p>428</p>
</td>
<td>
<p>17</p>
</td>
<td>
<p>317</p>
</td>
<td>
<p>94</p>
</td>
</tr>
<tr>
<td>
<p>1.4.</p>
</td>
<td>
<ul>
<li>individual interviews with students</li>
</ul>
</td>
<td>
<p>Undergraduate students of ‘Finance and Accounting’</p>
</td>
<td>
<p>116</p>
</td>
<td>
<p>39</p>
</td>
<td>
<p>65</p>
</td>
<td>
<p>12</p>
</td>
</tr>
</tbody>
</table>
<p></p>
<p>Source: own study based on research conducted between September 2016 and March 2017.</p>
<p>The results show that there is strong opposition to TFV override in every set of experiment. Against the TFV override
there were 83.9% CPAs, 74.1% accountants and 56.0% students. The problem is vital since in the eyes of those prearing
and using financial statements there is a move in the direction opposite to truth. Such an opinion is confirmed by the
rejection of the TFV assumption from IFRS Conceptual Frameworks. One may come to the conclusion that truth and TFV is
not the key issue, which is definitely not a good trend, in the author’s opinion. Although the EU implemented IFRS
without the (controversial) Conceptual Framework this is not a solace. The IFRS usage is expanding rapidly all over
the world and there is a threat that in the near future (with different lobbies’ pressure) it will be relevance that
completely replaces truth in financial statements. Such a possible change is neither necessary nor required. What is a
financial statement without truth? Is it still relevant / useful? In the author’s opinion, the answers to these two
questions are obvious and indisputable. If any information included in financial statements is not true, it is not
useful either, even if prepared under the dictate of investors. Besides, the role of science is approaching truth –
not escaping from it. </p>
<h2>5. Conclusions</h2>
<p>Debates on the role of accounting and truth in accounting seem to be a ‘never ending story’, ubt it does not mean
they are not significant. These experiments systematised the comprehension of TFV as well as its meaning in the
literature and the legal framework of accounting. Moreover the author identified, analysed and systematized the
changes in the TFV importance’s perception, as well as identified the trends in changes of TFV perception and its
evaluation. The article also presents the conclusions of the proceedings to be finalised by normative guidelines.</p>
<p>Thanks to a literature review, the especially designed experiments and empirical analysis, the author obtained
results that reveal interesting findings and should contribute to a discussion on truth in accounting. Those preparing
and using financial statements expressed less willingness to accept current trends related to conceptual frameworks
for accounting. They perceived a departure from emphasizing the importance of truth in financial statements as
something notably negative. Therefore there is a need for a further discussion on the future development of
accounting. </p>
<p>According to the studies, there is also noticeable trend towards a departure from TFV’s application. Its existence
and explanation is different for the EU as a whole and different for particular EU member states (like Poland). The
reason in the case of the EU as a whole, is the implementation of IFRSs. The IFRSs themselves have changed and put
more attention on relevance as one fundamental qualitative characteristic. According to the updated IFRS Conceptual
Framework, relevant financial information is capable of making a difference in the decisions made by users.
Information may be capable of making a difference in a decision, even if some users choose not to take advantage of it
or are already aware of it from other sources.</p>
<p>In Poland the proven impression that legal requirements removed the truth from accounting is generated by two main
reasons. Firstly, because accountants and auditors emphasize that being based only on TFV may be an area for potential
abuse. Such risk mostly leads to distortions in financial statements, and financial statements that encompass
distortions definitely must not be perceived as documents providing truth to recipients. Secondly, according to the
research, accountants and auditors do not accept their responsibility for indistinct rules. They would expect clear
guidelines in return, guidelines that could replace their professional judgement based on the TFV concept override.
</p>
<p>This paper proved the devaluation in the TFV concept in accounting (including reporting), which is particularly
evident in IFRS regulation and literature after 2010. Especially after 2010, we can see the transfer of emphasis from
the truth to the usefulness of financial reporting and the devaluation of the precautionary principle. According to
the author’s opinion, this trend is unfavourable, and independently of the procedure of practitioners in this field,
or whether constituting the law, the role of science is to uphold these fundamental values and indicate the correct
way to truth, not allowing ourselves to become embroiled in particular interests of any pressure groups. One can
indicate the transfer of emphasis from the truth towards the usefulness of financial reporting, as well as on the
devaluation of the principle of prudence. In the author’s opinion, this trend is unfavourable and the role of science
is to uphold these fundamental values and indicate the correct way to truth, not allowing to become embroiled in
particular interests of any group of interest.</p>
<p>The conclusions stated above have significant repercussions on accounting in general, and reporting in particular, in
every country, especially the EU member states such as Poland. Changes of the role and perception of TFV is observable
through the revision of accounting regulations. One must remember that every EU member is required to implement
relevant regulations into its own (local) legal environment. It is Directive 2013/34/EU that has guidelines for a
country’s accounting act. On the other hand, according to EU regulations there are some entities (at least those
quoted on European stock exchanges) for which the preparation of financial statements under IFRSs is mandatory. </p>
<p>The results of this study contribute to the discussion on truth in accounting and on the justification for the TFV’s
assumption in accounting. These conclusions are subject to common limitations of experimental research. The author
questioned mostly professionals and their judgments on truth in accounting, therefore the conclusions may not apply to
non-professionals and other financial statement users. Future research could examine the consequences of the changing
role of TFV on other parties. </p>
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<p>EWOLUCJA ZNACZENIA ZASADY WIERNEGO<br />I RZETELNEGO OBRAZU NA PRZYKŁADZIE POLSKI</p>
<p><span>Streszczenie: </span>Celem artykułu jest zagadnienie prawdy, która jest nierozerwalnie związana z
rachunkowością (i w związku z tym ze sprawozdawczością, jako jej częścią) i jest odzwierciedlona w zasadzie wiernego i
rzetelnego obrazu. Artykuł ukazuje istotę i ewolucję zasady wiernego i rzetelnego obrazu oraz wskazuje na jej rolę
wśród zestawu cech jakościowych sprawozdania finansowego. Po dokonaniu analizy zmian w sposobie postrzegania tej
zasady, w artykule znajduje się krytyczna ocena oraz wkład w postacie wskazówek dla stanowiących prawo w tym standardy
sprawozdawczości. Uwzględniając ograniczenia typowe dla badań behawioralnych w artykule znajdują się praktyczne i
społeczne implikacje wraz ze wskazaniem jak zasada wiernego i rzetelnego obrazu wpływa na odbiorców sprawozdań
finansowych, jak i na osoby je sporządzające.</p>
<p><span>Słowa kluczowe:</span> zasada wiernego i rzetelnego obrazu, prawda w rachunkowości, prawda w
sprawo-<br />zdawczości, cechy jakościowe sprawozdań finansowych.</p>