The importance of accounting would neither be what it is nor be understood if accounting were not a faithful reflection of the reality of an organisation; and it is here that the concept of the true and fair view gains its strength.

If everything expressed in a company’s annual accounts — understood as the balance sheet, the profit and loss account, the statement of changes in equity, the cash flow statement and the notes to the accounts — were a distortion of organisational reality, the knowledge generated from interpreting the information presented would make no sense at all.

The Spanish General Accounting Plan (Plan General Contable), following the changes introduced in various amendments — including that set out in Royal Decree 1159/2010 of 17 September, which approved the Rules for the Preparation of Consolidated Annual Accounts and amended the General Accounting Plan approved by Royal Decree 1514/2007 of 16 November, as well as the General Accounting Plan for Small and Medium-sized Enterprises approved by Royal Decree 1515/2007 of 16 November — maintains the main premise of drawing up the annual accounts in a clear manner, with information that is understandable and comprehensible, as well as useful to users, since it will thereby help them to make decisions consistent with reality, having been able to observe the financial position and results of the company in accordance with the legal provisions.

At this point it is important to stress that the true and fair view is achieved — in addition to having the above premises clearly in mind — through the application of various accounting requirements, principles and criteria that lead to the aforementioned view of the organisation. Indeed, should compliance with the said requirements, principles and criteria not be sufficient to present the correct view, adequate information must be provided in the notes to the accounts, understood as complementary to fulfilling the basic objective of accounting.

Certain exceptional circumstances regarding compliance with the true and fair view that render them incompatible, and that must be incorporated into the annual accounts, will be regarded as inappropriate to apply. In such cases, the explanation of these facts in the notes to the accounts must be sufficient, and the account of the exceptional circumstances will emphasise their impact on the equity, financial position and results of the companies.

The constant application of the true and fair view in the accountant’s work is, therefore, an essential element for the development of the knowledge obtained through accounting information. To the above we must add the importance that this information has not only for accounting itself, for the organisation’s stakeholders or for society, but also for other sciences such as finance or economics itself, which draw on this knowledge to build models, calculate certain ratios or foresee the next micro- and macroeconomic scenario.