Abstract
The main thrust of the research has been to establish the opinions of a representative sample of the UK financial community about the underlying concepts of the ultimate criterion used in evaluating alternative approaches to provide information in financial reporting. In doing so, the research has sought to determine whether the members of this community perceive links between the TFO and the exercise of "professional accounting judgement" (PAJ) by preparers and auditors of financial statements in complying with GAAP (the UK approach), as opposed to a greater emphasis on compliance with no possibility of the exercise of PAJ in overriding an accounting standard (the US approach). In addition, the research has aimed to examine the extent to which the members of the UK financial community perceive links between concepts of "representational faithfulness" such as the "True and Fair View" (TFV) with or without the TFO, or "Fair Presentation" (in conformity with IAS GAAP or US GAAP), and a wider set of "qualitative characteristics" of financial accounting information which are mentioned in the conceptual framework literature. The research instrument was a postal questionnaire, which was sent to 500 financial directors and 500 external auditors of large listed companies, and 1,000 financial analysts. The overall response rate was 27.15%. The main findings can be summarised as follows: 1. All three sub-groups expressed strong support for the concept and practice of TFO and the exercise of PAJ in compliance with GAAP. However, the use of TFO should be confined to exceptional circumstances, as normally compliance with GAAP was considered to be a necessary condition of providing a TFV; 2. An approach to financial reporting that involved the exercise of PAJ and the possibility of overriding an accounting standard was considered a preferable approach to financial reporting, when compared to a compliance-oriented approach such as that required under US GAAP;