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

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If a change in accounting principles has no material effect, how should an auditor report on consistency?

Not refer to the consistency in the auditor's report.
Refer to it in the opinion paragraph.
Explicitly agree that the change is preferred.
Include it in an emphasis-of-matter paragraph.

The correct answer is: Not refer to the consistency in the auditor's report.

When a change in accounting principles has no material effect, the auditor's reporting on consistency does not require specific mention in the auditor's report. The basis for this is rooted in the idea that consistency refers to the application of accounting principles from one period to the next. If the change is immaterial, it does not significantly impact the users of the financial statements; therefore, referring to it in the report could be unnecessary and may not provide any meaningful information to users. The auditor’s goal is to present an accurate representation of the company’s financial position without overwhelming the report with details that do not meaningfully affect the decision-making of the users. Thus, omitting reference to immaterial changes is in line with the objective of clarity and conciseness in the financial reporting process.