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 an additional 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 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. This is because the financial statements must conform to generally accepted accounting principles to ensure its relevance and comparability. Failure to justify a change in accounting principles implies a lack of conformity with the expected standards, which needs to be disclosed by the auditors.

If Management Fails to Provide Adequate Justification for a Change