If management fails to provide adequate justification for a change from one generally accepted accounting principle to another,the auditors should
A) add an additional paragraph and express a qualified or an adverse opinion on the entity's financial statements for lack of conformity with generally accepted accounting principles.
B) disclaim an opinion on the entity's financial statements because of uncertainty.
C) disclose the matter in an additional paragraph but not modify the opinion paragraph on the entity's financial statements.
D) neither modify the opinion on the entity's financial statements nor disclose the matter because both principles are generally accepted accounting principles.

Question

Quizplus · Accepted Answer

If management fails to provide adequate justification for a change in accounting principle, the auditors should express a qualified or adverse opinion on the entity's financial statements for lack of conformity with generally accepted accounting principles. This is because the financial statements must conform to the generally accepted accounting principles, and if they do not, the auditors cannot issue an unqualified opinion. Therefore, adding an additional paragraph and expressing a qualified or adverse opinion is the best choice. The other options do not fully address the issue of lack of conformity with generally accepted accounting principles.

If Management Fails to Provide Adequate Justification for a Change