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IAI Actuarial Core Principles · Business Finance · Regulation of financial reporting of incorporated entities

A company's financial statements must give a true and fair view and comply with the notified accounting standards. If the company's financial statements do not comply with an accounting standard, what does the Act require?

If financial statements deviate from a notified accounting standard, the company must disclose the deviation, the reasons for it and the financial effect arising from it. A true and fair view does not excuse non-compliance, and the auditor reports on the matter rather than correcting the figures.

  1. ANothing further, since true and fair view overrides standards
  2. BThe company must disclose the deviation from the standard, the reasons for it and the financial effect, if any, arising from itCorrect
  3. CThe auditor alone must correct the figures before signing
  4. DThe deviation need only be reported to the shareholders at the next AGM
  5. The financial statements are automatically void and must be refiled within one day

Explanation

The Act requires financial statements to comply with notified accounting standards. Where they do not, the company must disclose the deviation, the reasons and the financial effect. Option A is wrong because true and fair view does not excuse non-compliance. The auditor reports on it but does not correct the figures.

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