Several sources of GAAP consulted by an auditor are in conflict as to the application of an accounting principle.Which of the following should the auditor consider to be the most authoritative?
A)CICA Handbook.
B)CICA Exposure Drafts.
C)Industry practice.
D)Federal legislation.

Question

Quizplus · Accepted Answer

The CICA (Canadian Institute of Chartered Accountants) Handbook is considered the most authoritative source of GAAP (Generally Accepted Accounting Principles) in Canada. It is a comprehensive guide that provides guidance on accounting principles and practices for various industries and business types. It is updated regularly and is widely recognized by the accounting profession, regulators, and other stakeholders. Therefore, when there is a conflict between various sources of GAAP, the auditor should consider the CICA Handbook as the most authoritative source.

Option B, C, and D are incorrect as they are not considered as primary sources of GAAP in Canada. CICA Exposure Drafts are proposed changes to the Handbook, and these drafts have no authoritative effect until incorporated into the Handbook. Industry practice and Federal legislation cannot override or supersede the GAAP prescribed by the CICA Handbook.

Several Sources of GAAP Consulted by an Auditor Are in Conflict