Final answer:
A change in accounting estimate normally does not affect the consistency phase in the auditor's standard report. Changes that affect the comparability of financial statements, like accounting principles, combined companies, or corrections in principle, do require explanatory paragraphs, but estimates are seen as updates based on new information, not inconsistencies.
Step-by-step explanation:
In the context of an auditor's standard report, a change in accounting estimate is normally the circumstance that does not affect the consistency phrase. Changes in accounting principles, changes in the companies included in combined financial statements, and corrections of errors in principle generally do require the auditor to include an explanatory paragraph to address the consistency of the financial statements. These changes are significant and may impact the comparability of the financial statements over time, hence needing a clear mention in the auditor’s report.
On the other hand, a change in accounting estimate, such as a change in the useful life of an asset or a revision of estimated bad debts, is usually a result of new information or new developments and is not considered an inconsistency. Instead, it is an update based on the best available information and does not require a consistent explanatory paragraph. This distinction helps users of the financial statements understand the nature of any changes and their impact on the financials.