Consistency in the F/S Flashcards

1
Q

When comparability has been materially changed between periods, what needs to happen?

A

Emphasis of matter paragraph

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2
Q

What would cause a comparability change in periods?

A

1) Change in accounting principles

2) Correct a misstatement from a prior year

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3
Q

What boxes need to be check if there is a change in accounting principle?

A

1) New accounting principle approved by GAAP
2) Change is properly accounted for
3) Disclosures are adequate
4) Alternative accounting principle is preferable

If all are met, then the auditor should add a emphasis of matter paragraph

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4
Q

If the change in accounting principle is not material, does it needs to be included in the audit report emphasis-of-matter paragraph?

A

No, if it is not material, it does not need to be included.

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