Which case below is not one of the examples of changes that affect consistency and require an explanatory paragraph, if materialA.Changes in reporting entitiesB.Corrections of accounting principle errors C.Changes in accounting principlesD.Scope limitations

According to the consistency principle of accounting, an accounting policy or method should be…

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examples of changes that affect consistency and

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter15: Audit Reports For Financial Statement Audits

Section: Chapter Questions

Problem 12RQSC

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Which case below is not one of the examples of changes that affect consistency and require an explanatory paragraph, if material

Changes in reporting entities

Corrections of accounting principle errors

Changes in accounting principles

Scope limitations

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The accounting and auditing literature discusses several different types of accounting changes. For each of the changes listed below (a. through c.), indicate whether the auditor should add a paragraph to the audit report, assuming that the change had a material effect on the financial statements and was properly justified, accounted for, and disclosed. Assume that the organization is a U.S. non-public company. a. Change from one GAAP to another GAAP b. Change in accounting estimate not affected by a change in accounting principle c. Change in accounting estimate affected by a change in accounting principle d. Correction of an error c. Change from non-GAAP to GAAP (a special case of correction of an error)
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Changes in accounting policies are always accounted for as prospective in application. TRUE or FALSE
When there is a lack of consistent application of GAAP due to a new accounting pronouncement, no explanatory paragraph is required Select one: True False
Which of the following is false? a. GAAP and IFRS have the same absolute standard regarding the reporting of error corrections in previously issued financial statements. b. The accounting for changes in estimates is similar between GAAP and IFRS. c. Under IFRS, the impracticability exception applies both to changes in accounting principles and to the correction of errors. d. GAAP has detailed guidance on the accounting and reporting of indirect effects; IFRS does not.
Directions: Please select the appropriate answer on the statement below;B - If the statement is trueS - When the statement is false or part of the statement is false The objective of the first reporting standard is to ensure that comparisons of financial statements between periods do not have a material impact on changes in accounting standards or provide adequate disclosures if those changes have a material impact on the comparison of financial statements between periods.
What is the indirect effect of a change in accounting principle?Briefly describe the reporting of the indirect effectsof a change in accounting principle.
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