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Various types of accounting changes can effect the second reporting standard of the generally accepted auditing standards.
Various types of accounting changes can effect the second reporting standard of the generally accepted auditing standards.This standard reads,the auditor must identify in the auditor's report those circumstances in which such principles have not been consistently obserned in the current period in relation to the preceding period. assume that the following list describe s change that have amaterial effect on a client's financial statements for the current year:A)correction of a mathematical error in inventory pricing made in a prior period.B)a change from prime costing to full absorption costig for inventory valuation.c)a change from presentation of statements of statements of individual companies to presentation of consolidated statements.d)A change from deferring and amortization preproduction costs to recording such costs as an expense when incurred because future benefits of the costs have become doubtful. The new accounting method was adopted in recognition of the change in estimated future benefits.E)A change from the completed-contract method to the percentage-of-completion method of accounting for long term construction contracts.F)A change in the estimate useful life of previously recorded fixed assets based on newly acquired information.G)A change to including the employer share of social security(FICA) taxes as "retirement benefits"on the income statement from including it with "other taxes"H)A change from the FIFO method of inventory pricing to the LIFO method of inventory pricing.Identify the type of change described in each item above, and state whether any modification is required in the auditor's report as it relates to the second standard of reporting.Organize your answer sheet as shown. For example, achange from LIFO method of inventory pricing to the FIFO method of inventory pricing would appear as shown. Assume the each item is material.Should Auditor's report Be Modified?Example: An accounting change from one generally accepted accounting principle to another generally accepted accounting principle. Yes
