Unformatted text preview: ity's ability to continue as a going concern for a reasonable period of time, not to exceed one year.
If the auditor concludes that there is substantial doubt, the auditor should include an explanatory
paragraph following the opinion paragraph and should include the terms, "substantial doubt" and "going
concern." The time period is not mentioned in the audit report.
Choices "a", "b", and "d" are incorrect, as explained above.
For which of the following events would an auditor issue a report that omits any reference to consistency?
a. A change in the method of accounting for inventories.
b. A change from an accounting principle that is not generally accepted to one that is generally
c. A change in the useful life used to calculate the provision for depreciation expense.
d. Management's lack of reasonable justification for a change in accounting principle.
Choice "c" is correct. A change in accounting estimate (such as a change in the useful life of a
depreciable asset) is accounted for prospectively and does not affect the comparability...
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This note was uploaded on 06/14/2013 for the course ACCOUNTING audit cpa taught by Professor Becker during the Fall '12 term at Keller Graduate School of Management.
- Fall '12