If management fails to provide adequate justification for a change from one generally accepted accounting principle to another,the auditors should
A) Add an additional paragraph and express a qualified or an adverse opinion on the entity's financial statements for lack of conformity with generally accepted accounting principles.
B) Disclaim an opinion on the entity's financial statements because of uncertainty.
C) Disclose the matter in a separate explanatory paragraph but not modify the opinion paragraph on the entity's financial statements.
D) Neither modify the opinion on the entity's financial statements nor disclose the matter because both principles are generally accepted accounting principles.

Question

Quizplus · Accepted Answer

If management fails to provide adequate justification for a change from one generally accepted accounting principle to another, the auditors should express a qualified or an adverse opinion on the entity's financial statements for lack of conformity with generally accepted accounting principles. This is because the failure to justify the change implies a departure from GAAP, which requires auditors to modify their opinion on the financial statements.

If Management Fails to Provide Adequate Justification for a Change