CMA Intermediate · Corporate Accounting and Auditing · Brief Introduction to Auditing Standards
Under SA 200, where conflicts exist between the financial reporting framework and the other sources from which direction on its application may be obtained, what is the position?
The source with the highest authority prevails. SA 200 provides that when the financial reporting framework conflicts with other sources of direction on its application, or those sources conflict among themselves, authority, not recency, popularity or management preference, decides.
- AThe most recently published source prevails
- BThe source with the highest authority prevailsCorrect
- CThe source that is most widely practised in the industry prevails
- DThe management's chosen source prevails
Explanation
SA 200 states that where conflicts exist among such sources, the source with the highest authority prevails. Recency, prevalence or management's preference is not the test, so those options are wrong.
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