Consider the following situations that might arise in the audit of the financial
ID: 2499531 • Letter: C
Question
Consider the following situations that might arise in the audit of the financial statements of a nonpublic company. Indicate the type of opinion(s) that would be issued and describe any other modification to the standard audit report that would result. Unless indicated otherwise, assume that material amounts are involved. When more than one opinion might be issued, explain when each is appropriate.
a. A company changes from FIFO to LIFO for inventory valuation and the auditor concurs with the change. The change has a material effect on the comparability of the entity's financial statements this year, but is expected to have an immaterial effect in the future.
Explanation / Answer
The Auditor will issue an unmodified report and he will need to add an emphasis of matter paragraph