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rigorous application
of those standards. 
(c) 
To bring about 
convergence of national accounting standards
and International Accounting 
Standards to high quality solutions 
3.6.1 The use and application of International Financial Reporting Standards (IFRSs) 
IFRSs have helped both to improve and to harmonise financial reporting around the world. The 
standards are used: 

As national requirements, often after a national process 

As the basis for all or some national requirements 

As an international benchmark for those countries which develop their own requirements 

By regulatory authorities for domestic and foreign companies 

By 
companies 
themselves 
3.7 Generally Accepted Accounting Practice (GAAP)
This term signifies all the rules, from whatever source, which govern accounting. 
GAAP 
is a set of rules governing accounting. The rules may derive from: 

Company law (mainly CA 2006) 

Accounting 
standards 

International accounting standards and statutory requirements in other countries (particularly the US) 

Stock Exchange requirements 
3.8 True and fair view 
True and fair view
is not defined in company law or accounting standards. For practical purposes, it 
can be taken to mean accurate and not misleading. 
Company law requires that: 

The statement of financial position must give a 
true and fair view of the state of affairs 
of the 
company as at the end of the financial year. 

The profit or loss account (income statement) must give a 
true and fair view of the profit or loss 
of the company for the financial year. 
3.8.1 True and fair 'override' 
The Companies Act 2006 (TSO, 2006) states that the directors may depart from any of its provisions if 
these are inconsistent with the requirement to give a true and fair view. This is commonly referred to as 
the 'true and fair override'. It has been treated as an important loophole in the law and has been the 
cause of much argument and dissatisfaction within the accounting profession. 
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CHAPTER 8
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THE ROLE OF ACCOUNTING