[ncont19]

I am using Becker Self Study and keep running across MCQ’s and SIM’s that seem to have contradictory information. Some questions (and even the lecture) seem to think that it isn’t necessary to add an emphasis of matter paragraph to an unmodified opinion when there is a change in accounting estimate, such as a change in depreciation method. Other questions say that the right answer is to add the emphasis of matter paragraph.

From my limited understanding, I thought that changes in accounting principle, changes in accounting entity and the correction of accounting errors should include emphasis of matter. Change in estimates should not.

I know these questions make up a small part of AUD, but genuinely hate when I get contradictory answers for similar question. Please help!!!

BEC 2/14/14 -- 85
FAR 4/24/14 -- 88
REG 5/29/14 -- 92
AUD 7/1/14 -- ??

[Anonymous]

Post questions to show us the example, sometimes if the amount is immaterial you wouldn't need an emphasis of matter or if there isn't proper disclosure you would would modify the opinion

[floacct]

Well this is a tough one bossman. The answer is it depends! If a change in accounting estimate is “indistinguishable” from a change in accounting principle it needs to be added in an emphasis of matter paragraph. It is essentially a judgement call. Gonna have to dig deep to answer this one. Hope that helps!

[NYCaccountant]

If the estimate is based just off of judgment, no emphasis of matter paragraph is necessary. If there is a change in accounting principle and estimate, it's a change in accounting principle, which requires the emphasis of matter paragraph. I remember this from FAR, if the estimate and principle are indistinguishable, then it's a change in principle.

Changing depreciation method is a change in estimate. So is estimating bad debt. A change in the accounting for subsidiary because you feel like it requires an emphasis of matter paragraph. A change in accounting for sub because something happened, does not need emphasis of matter paragraph. I just read this last week while reading through the reporting chapter. Wiley has a entire chart for this, which I think is helpful.

FAR - 93
REG - 87
BEC - 84!!!!
AUD - 99!!!!!! CPA exam complete.

[Author]

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