Auditing 1 Accounting.

Various types of "accounting changes" can affect audit reporting AICPA auditing standards indicate that an emphasis-of-matter explanatory paragraph should be included when accounting principles have not been consistently applied in the current period in relation to the preceding period. Assume that the following list describes changes that have a material effect on a clients's financial statements for the current year;

1. Correction of a mathematical error in inventory pricing made in a prior period
2. A change from deferring and amortizing preproduction costs to recording such doubtful. The new accounting method was adopted in recognition of the change in estimated future benefits
3. A change from the completed-contract method to the percentage-of-completion method of accounting for long-term constructions contracts
4. A change in the estimated useful life of previously recorded fixed assets based on newly acquired information.
5. A Change in including the employer share of Social Security (FICA) taxes as "retirement benefits" on the income statements from including it with " other taxes".
6. A change from prime costing to full absorption costing for inventory valuation.
7. A change from presentation of statments of individual companies to presentation of consolidation statements.
8. A change from the FIFO method of inventory pricing to the LIFO method of inventory pricing.