[Anonymous]

Becker reveiw says that a correction of an error in principle requires a modified unqualified opinion.

But later it also says an unqualified opinion can be made as long as ALL of the following three conditions are met:

1. The method of accounting FOR THE CHANGE is ACCEPTABLE

2. The change is to an acceptable principle

3. Management is justified in the change

In the case of a change from cash-basis (non-GAAP, and probably not acceptable?) to accrual basis, should a modified unqualified or qualified be issued?

Does anyone have any ideas?

Thanks in advance!

[Last_First_MI]

double post

[Last_First_MI]

I would assume it to be modified unqualified because they changed to accrual basis, aka GAAP basis, from a non-GAAP basis accounting. So everything is correct now and there is no departures from GAAP (assuming the accrual basis FS are now correct). Reason for the modified unqualified is because consistency is implied. Since they are now on accrual basis there is no consistency from prior years that were on cash basis so that would want to be noted in the opinion about the change that affects the consistency of FS. Hope this helps.

[Anonymous]

I'm in the middle of studying AUD right now using Yaeger. I believe this question should be covered in Module 5 which I will be going over today and the next couple of days with Gary Bulmash. If Gary covers this, I will be sure to let you know.

[Author]

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