True and Fair Override: Accounting Expert Opinions, Explanations from Behavioural Theories, and Discussions for Sustainability Accounting

Anne Marie Garvey, Laura Parte, Bridget McNally and José Antonio Gonzalo-Angulo
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Anne Marie Garvey: Department of Economics and Management, Faculty of Economics, Business and Tourism, Universidad de Alcalá, Plaza de la Victoria, 2, Alcalá de Henares, 28802 Madrid, Spain
Laura Parte: Department of Business and Accounting, Faculty of Economics and Business Administration, National Distance Education University (UNED), Paseo Senda del Rey, 11, 28040 Madrid, Spain
José Antonio Gonzalo-Angulo: Department of Economics and Management, Faculty of Economics, Business and Tourism, Universidad de Alcalá, Plaza de la Victoria, 2, Alcalá de Henares, 28802 Madrid, Spain

Sustainability, 2021, vol. 13, issue 4, 1-23

Abstract: This study focuses on true and fair view (TFV) and fair presentation (FP) in financial statements. It questions if attitudes towards the true and fair override (TFO) condition, included in European Union (EU) legislation and International Financial Reporting Standards (IFRS), is indicative of a principles-based approach or lip service to a concept that is rarely applied. We address this subject because we consider that there should be a consensus and harmonisation on TFV—that TFO has a vital role within the principles-based framework, and while the accounting standard development process should limit the application of the TFO concept, in practice, it is an important reporting option. TFV/TFO harmonisation also has an important role in sustainability accounting, to reveal company actions which are influenced by more than just the objective of complying with the standards. In the empirical part, accounting experts from 24 European countries were surveyed. Their responses suggest a lack of clarity around the distinction between TFV and FP and a reluctance to consider, in practice, the application of the TFO. Drawing on behavioural theories—ostrich effect and comfort theory—we find explanations and reasoning behind attitudes to these cornerstone concepts. Specifically, we try to explain behavioural attitudes to TFV/FP and TFO positions, which defend uncompromising compliance with standards.

Keywords: true and fair view; fair presentation; override; survey; sustainability; IFRS; ostrich effect; comfort theory (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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