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RELIABILITY AND FAITHFUL REPRESENTATION IN THE ACCOUNTING THEORY – A LITERATURE REVIEW
Abstract
In the era of two competing valuation concepts of historical costs and current costs, a definition and designated criteria of faithful representation are essential in order to be successful in providing financial information prepared in accounting system. Based on the conceptual framework study and meta-analysis of English and Polish accounting literature authors conclude that theory of accounting hardly at all provides guidance referring to the definition of faithful representation of economic phenomena it purports to represent. Lack of specified conditions for recognition of reliable financial information impairs the goal of financial reporting. Moreover, conducted analysis revealed that reliability concept should be considered on many research fields that go beyond traditional accounting theory. The paper contributes into theory and practice of accounting by depiction of recent theoretical developments of †fairness', †reliability' and †true and fair view' concepts, which undoubtedly play the central role in explaining accounting measurement and financial information communication. Authors made a conclusion that confirmatory and predictive value of financial information, which is required by stakeholders nowadays, shows the necessity to once again redefine the concept to ensure its compliance with accounting conceptual background and to take modern information contents into account at the same time.
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