For which of the following events would an auditor issue a report that does not include 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 accepted.
C) A change in the service life used to calculate depreciation expense.
D) A change in accounting principle without reasonable justification from management.

Question

Quizplus · Accepted Answer

Consistency refers to the use of the same accounting principles and methods from one period to another, and the auditor is required to evaluate whether the consistency principle has been followed in their audit. However, a change in the estimate of the service life used to calculate the depreciation expense does not affect the consistency of the financial statements since it is an estimate that can be revised based on new information or changes in circumstances. Therefore, the auditor would not need to issue a report that references consistency in this scenario. Choices A, B, and D involve significant changes in accounting principles that would require disclosure and evaluation of consistency in the auditor's report.

For Which of the Following Events Would an Auditor Issue