Question

The third reporting standard of GAAS states that the auditor’s opinion on the financial statements should indicate whether they present fairly the financial position, results of operations, and changes in financial position in accordance with GAAP. The CICA Handbook Recommendations are an important source of GAAP. However, the Recommendations may allow for different interpretations and choices in how they are applied, or they may be silent.

Required:
a. How does the auditor assess whether financial statements are in accordance with GAAP when a conclusion on GAAP is not found in the CICA Handbook Recommendations? Give an example of an accounting issue that may not be covered in the Recommendations.
b. How does the auditor assess whether financial statements are in accordance with GAAP when the CICA Handbook Recommendations allow for different accounting methods to be acceptable? Give an example of an accounting issue for which alternative acceptable accounting treatments are provided in the Recommendations.



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  • CreatedJanuary 09, 2015
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