The true and fair view construct in the context of the Polish transition economy: some local insights

Abstract

This paper addresses issues of financial reporting within the context of European harmonization and accession. The construct of the True and Fair View (hereafter TFV) constitutes a locus of reflection for the establishment of a mutually intelligible foundation for financial reporting in the New Europe including applicant states for European Union (hereafter EU) membership. This paper provides insights as to the meaning and the local embeddedness of TFV in the context of the Polish transitional economy. The Audit Act 1994 and the Accounting Act 1994, as amended by the 2000 Acts, incorporate the provisions of European law with the aim of harmonizing Polish accounting and financial reporting regulations with the corresponding regulations in the EU. The Accounting Act 1994 for the first time introduced in Poland the current wording of the TFV construct in accordance with the requirements of the Fourth Directive. The question addressed in this paper is how the construct of TFV is understood and operationalized. This paper demonstrates the particular local understanding of the TFV construct in contemporary Poland through (1) textual analysis of the legal pronouncements (both national and international) and (2) narrative analysis of local debates and commentaries in the national press and academic journals. Given the difficulty of expressing judgements based upon accumulated experience, where much of the experience is constituted by continental influence, in particular the German tradition, and regulatory arrangements of a centrally planned economy, Polish practice perceives the TFV requirement primarily as a formal and legal compliance, and not yet as something with a substantial rationale in the observance of the rule of accounting law. The paper concludes that TFV is a contingent construct which resides in a particular socio-economic, historic and cultural context and is understood differently outside this context. The local Polish reception and understanding is articulated.