If management fails to provide adequate justification for a change from one generally accepted accounting principle to another, the auditors should
A)Modify the Opinion on the Financial Statements section of the report for lack of conformity with generally accepted accounting principles.
B)Modify the Opinion on the Financial Statements section and Basis for Opinion section of the report for lack of conformity with generally accepted accounting principles.
C)disclose the matter in an explanatory paragraph but not modify the Opinion on the Financial Statements section of the report.
D)Not modify the report because both principles are generally accepted accounting principles.

Question

Quizplus · Accepted Answer

When management changes from one generally accepted accounting principle (GAAP) to another without adequate justification, it results in a lack of conformity with GAAP. Auditors should modify the Opinion on the Financial Statements section of their report to reflect this non-conformity.

If Management Fails to Provide Adequate Justification for a Change