According to Rule 203,Accounting Principles,requires the auditor to adhere to official pronouncements except when
A) Complying would violate client confidentiality.
B) Pending legislation may change the reporting requirements of the client.
C) Adherence to a pronouncement would be misleading.
D) It has been established that financial statement users prefer an alternative presentation of information.

Question

Quizplus · Accepted Answer

Rule 203 requires the auditor to adhere to official pronouncements except when adherence would be misleading. This means that if following a pronouncement would result in a distortion or misrepresentation of the financial statements, the auditor should not follow it. However, adhering to a pronouncement would not violate client confidentiality (choice A), nor would pending legislation change reporting requirements (choice B), and it would not matter if financial statement users prefer an alternative presentation (choice D). Therefore, C is the best choice.

According to Rule 203,Accounting Principles,requires the Auditor to Adhere to Official