A Proposal to Replace ‘True and Fair View’ With ‘Acceptable Risk of Material Misstatement’

Abstract

This article examines argumentation factors which affect the truth of an audit opinion. We propose that the auditor's report be revised to replace the words ‘true and fair view’ with ‘acceptable risk of material misstatement’. This would better align the communication of auditors with the characteristics of accounting information upon which they report. Adoption of the wording ‘acceptable risk of material misstatement’ will facilitate a better appreciation by users of financial statements of the accounting estimates in financial statements.