Explanation Choice d is correct If the change in accounting principles has an

Explanation choice d is correct if the change in

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Not refer to the change in the auditor's report.ExplanationChoice "d" is correct. If the change in accounting principles has an immaterial effect on the comparability of financial statements, no revision to the audit report is necessary.Choice "c" is incorrect. The auditor's report would not need to be modified when the effect of thechange on comparability is immaterial, therefore, the auditor does not need to refer to the note in the financial statements that discusses the change.Choice "a" is incorrect. A change in accounting principles, which has a material effect on the comparability of financial statements, would refer to the change in an emphasis-of-matter paragraph.Choice "b" is incorrect. The auditor does not need to explicitly state whether the change conforms with GAAP because the effect of the change is immaterial. The auditor's standard report implies that the auditor is satisfied that the comparability of financial statements between periods has not been materially affected by changes in accounting principles, and that such principles have been consistently applied between or among periods because either (a) no changein accounting principles has occurred, or (b) there has been a change in accounting principles or in the method of their application, but the effect of the change on the comparability of the financial statements is not material.
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  • Spring '14
  • Auditor's report

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