If there is a deviation in the statements' preparation in accordance with GAAP, and another accounting principle was applied on a basis that was not consistent with that of the preceding year:
A) the auditor must choose which modification to include in the audit report.
B) only the most material modification can be disclosed.
C) more than once modification should be included in the report.
D) none of the above.

Question

Quizplus · Accepted Answer

If there is a deviation in the preparation of statements in accordance with GAAP, and another accounting principle was applied on a basis that was not consistent with the preceding year, then more than one modification should be included in the audit report. This is because both the inconsistency in the application of accounting principles and the deviation from GAAP can have material effects on financial statements and therefore should be disclosed to users. Selecting only the most material modification or choosing which modification to include would not provide users with sufficient information about the financial statements.

If There Is a Deviation in the Statements' Preparation in Accordance