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

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What action should the auditor take regarding a change in accounting principle that materially affects comparability?

Concur explicitly with the change
Issue an "except for" qualified opinion
Refer to the change in an emphasis-of-matter paragraph
Not report on the change

The correct answer is: Refer to the change in an emphasis-of-matter paragraph

When an auditor encounters a change in accounting principle that materially affects comparability, the appropriate action is to refer to the change in an emphasis-of-matter paragraph in the audit report. This approach allows the auditor to highlight the significance of the change while not detracting from the overall opinion on the financial statements. The emphasis-of-matter paragraph serves to inform readers that a significant change has occurred, which may affect their understanding of the financial statements. It does not imply that the financial statements are misstated or that there are issues with them; rather, it presents essential contextual information to the users of the financial statements. By utilizing an emphasis-of-matter paragraph, the auditor acknowledges the impact of the change on comparability without modifying their opinion regarding the fairness of the financial statements as a whole. This approach aligns with auditing standards that emphasize transparency and clarity in communication with users about significant transactions or changes that could influence their decision-making.