? In topic 1 we noted that it is ultimately up to the Courts to arbitrate on

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In topic 1 we noted that it is ultimately up to the Courts to arbitrate on the meaning of true and fair. This raises the question of how well the judiciary understands accounting principles. No disrespect is intended to the Deputy President in the following case, which demonstrates the potential for misunderstanding when accounting jargon is used. The following statement was made by the Deputy President S A Forgie of the Administrative Appeals Tribunal: "[80] The fact that a contingent liability is dependent upon the occurrence of certain events and will not become an actual liability unless those events occur does not mean that it is a liability that can be ignored. Taxpayers maintaining books of account would record it as a contingent liability during the term of the guarantee and while those events have not yet come to pass. They do so because events may expose them to an actual liability and they must make provision for it." (emphasis added) [Willersdorf-Greene v CMR of Taxation (2009] AATA 649] In topic 1 we noted that it is ultimately up to the Courts to arbitrate on the meaning of true and fair. This raises the question of how well the judiciary understands accounting principles. No disrespect is intended to the Deputy President in the following case, which demonstrates the potential for misunderstanding when accounting jargon is used. The following statement was made by the Deputy President S A Forgie of the Administrative Appeals Tribunal: "[80] The fact that a contingent liability is dependent upon the occurrence of certain events and will not become an actual liability unless those events occur does not mean that it is a liability that can be ignored. Taxpayers maintaining books of account would record it as a contingent liability during the term of the guarantee and while those events have not yet come to pass. They do so because events may expose them to an actual liability and they must make provision for it." (emphasis added) [Willersdorf-Greene v CMR of Taxation (2009] AATA 649]

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a The Deputy Presidents argument is consistent with the principles for the definition and recognitio... View the full answer