Question

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.

Answer 1

An auditor would not include any reference to consistency in their report for a change in accounting principle without reasonable justification from management.

Step-by-step explanation:

An auditor would issue a report that does not include any reference to consistency for option d. A change in accounting principle without reasonable justification from management.

When a change in accounting principle is made without reasonable justification from management, it indicates a lack of proper judgment or adherence to standard practices. In such cases, the auditor would not include any reference to consistency in their report.

On the other hand, for options a, b, and c, an auditor would include a reference to consistency in their report. These options involve changes in accounting methods, principles, or estimates that are justifiable and require disclosure of the impact on financial statements.