If Management Fails to Provide Adequate Justification for a Change

question 69

Multiple Choice

If management fails to provide adequate justification for a change from one generally accepted accounting principle to another,the auditors should

• A) add an additional paragraph and express a qualified or an adverse opinion on the entity's financial statements for lack of conformity with generally accepted accounting principles.
• B) disclaim an opinion on the entity's financial statements because of uncertainty.
• C) disclose the matter in an additional paragraph but not modify the opinion paragraph on the entity's financial statements.
• D) neither modify the opinion on the entity's financial statements nor disclose the matter because both principles are generally accepted accounting principles.

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Definitions:

Federalism

A political system where power is divided between a central government and various regional governments.

Profit-Sharing Plan

A company program that gives employees a share in the profits based on its quarterly or annual earnings.

Employee Morale

The overall outlook, satisfaction, and confidence that employees feel towards their workplace.

Incentive Plan

A program designed to motivate and reward employees for meeting or exceeding performance and productivity targets.