Where are changes in accounting principle disclosed on a company's annual report? Changes in accounting principle are disclosed in the disclosure notes. The note disclosure provides the reason for the change. Results of what accounts were affected by the changes made all located in the first financial statements. Do not forget to include the method used before and after changes have been made in the accounting principle. For instance, if the change was done by retrospective approach, then it would affect the income statements under the revenue, cost of goods sold, operating expenses, income tax expense, and net income. In the balance sheet it would reflect back into the inventory and retained earnings