Ch18 - EOC #19 Chapter 18-Audit Reports 18-1 An auditor is...

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EOC #19 Chapter 18-Audit Reports 18-1 An auditor is associated with financial statements when he or she has consented to the use of his or her name in a document such as an annual report. 18-2 Accounting changes can be categorized into changes that affect consistency and those that do not affect consistency. If the change in accounting principle or in the method of its application has a material effect on the comparability and consistency of the financial statements and the auditor concurs with the change, the auditor should refer to the change in an explanatory paragraph. Accounting changes that affect comparability but do not affect consistency, such as a change in an estimate or the correction of an error that does not involve a change in accounting principle, are normally disclosed in the footnotes to the financial statements but do not require an explanatory paragraph in the auditor's report. An accounting change can affect comparability but not consistency because an accounting principle can be consistently applied even when the underlying data used to apply it may change. For example, when the estimate of the useful life of a building
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Ch18 - EOC #19 Chapter 18-Audit Reports 18-1 An auditor is...

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