Fair presentation is an accounting standards’ requirement that an entity’s financial statements should be presented in a fair way to all relevant users of these statements. In other words, it is premised on the requirement that these statements should not be misleading. Under the principle of fair presentation, financial statements must fairly present the financial position, financial performance and cash flows of the entity. Fair presentation requires the faithful (unbiased) representation of the monetary effects of transactions, other events and circumstances in accordance with the applicable concepts and recognition criteria for assets, liabilities, income and expenses.

On the other hand, faithful representation is an accounting concept (or principle) that entails that an entity’s financial statements shall be prepared and produced in a manner that accurately reflects the real state of affairs of that entity and the conditions under which it operates. In other words, faithful representation implies that the information presented in the financial statements should reflect the transactions and events that occur during a period in a manner that represents their true economic substance rather than merely their legal form.

Fair presentation is an expected outcome of maintaining qualitative characteristics (particularly, reliability) of financial reporting and the application of accounting standards. Financial statements are meant to fairly present an entity’s financial position, financial performance and cash flows. A major requirement for fair presentation is the faithful representation of the monetary effects of transactions, other events and conditions in line with the applicable concepts and recognition criteria for assets, liabilities, income and expenses.