ACCA Advanced Audit and Assurance (AAA) Practice Exam

What does it mean if information is described as true?

1. It is subjective and open to interpretation

2. It conforms to reality and required standards

3. It is presented without sufficient evidence

4. It primarily focuses on investor perception

The correct answer is: It conforms to reality and required standards

When information is described as true, it means that it accurately reflects reality and adheres to the necessary standards. In the context of financial reporting and auditing, truthfulness is paramount to ensure that stakeholders, including investors, regulators, and the public, can rely on the information provided. This adherence involves complying with established norms, such as accounting standards, which require reports to present a fair and accurate view of a company's financial position and results of operations. The consideration of reality signifies that true information is not just about perception or opinion; it must be verifiable and consistent with factual evidence. Thus, the concept of truth in this context is grounded in objective criteria rather than subjective interpretations or personal biases. The other options do not align with the definition of true information. Subjectivity and interpretation imply variability that can undermine reliability. Presenting information without sufficient evidence would lead to a lack of credibility, making it difficult to establish truth. Focusing primarily on investor perception disregards the essential nature of truth, which lies in accuracy and evidence rather than subjective viewpoints.