Auditing and Attestation- Certified Public Accountant (CPA) Practice Exam -

For which scenario would an auditor's report omit any reference to consistency?

1. A change in the method of accounting for inventories.

2. Management's lack of reasonable justification for a change in accounting principle.

3. A change in the useful life used to calculate the provision for depreciation expense.

4. A change from an accounting principle that is not generally accepted to one that is generally accepted.

The correct answer is: A change in the useful life used to calculate the provision for depreciation expense.

An auditor's report may omit any reference to consistency in the scenario where there is a change in the useful life used to calculate the provision for depreciation expense. This is because a change in the useful life of an asset is considered a revision of accounting estimates rather than a change in accounting principle. Changes in accounting estimates are typically based on new information or developments, such as changes in market conditions or improvements in technology. Since these changes do not require adherence to the consistency concept (which applies to changes in accounting principles), the auditor does not need to comment on them in the report. The focus remains on ensuring that the changes are adequately disclosed and that they reflect the company's current circumstances rather than a shift in the accounting framework itself. In contrast, the other scenarios involve changes in accounting principles, which would necessitate a discussion of consistency because they impact the comparability of financial statements over time.