Final answer:
The statement is true. 'Free from error' is a component of the faithful representation principle in financial reporting, where it contributes to the accuracy, completeness, and neutrality of financial statements without implying the statements are perfect, but that they should not contain material errors or omissions.
Step-by-step explanation:
True, 'free from error' is indeed a component of faithful representation. Faithful representation is a conceptual accounting principle that states that financial statements should be accurate, complete, and neutral. The concept is an essential quality characteristic outlined in the qualitative characteristics of useful financial information according to the framework provided by the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB). 'Free from error' does not imply that a financial statement will be perfect, but that it should not contain material errors or omissions in the context of its preparation. Being free from material error enhances both the reliability and credibility of financial information, thus upholding the principle of faithful representation.
It is important to note, however, that while being free from error is a desirable quality of financial information, it is often judged within the realm of 'materiality' – an accounting principle that ponders the significance of an omission or misstatement of information, and its influence on the economic decisions of users.