Lords seek FRC clarification on true and fair view and meaning of prudence

The accounting regulator has remained tight-lipped on requests from the House of Lords Economic Affairs Select Committee to clarify what constitutes ‘true and fair’.

In an open letter from Lord Hollick, chair of the House of Lords economic affairs committee, to FRC chief executive Stephen Haddrill, the committee pressed the regulator to justify its stance. It asked whether QC George Bompas’s opinion alters the FRC’s view that ‘concerns expressed on this issue are misconceived’ and whether the regulator will take any further steps to clarify or resolve the difference of opinion.

It also called for the concept of prudence to be reinserted into the conceptual framework used by the IASB when writing International Financial Reporting Standards (IFRS), and probed the FRC on whether it agrees with the IASB’s definition of prudence.