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Dear Gromit,
What is effect of change in accounting policy on audit report? For example firm decides to value its investment propreties from cost model to fair value model.
There need be no effect on the audit report provided the change in in line with the relevant accounting standard.
Changes in accounting policy are retrospective so that opening figures and comparatives have to be restated. The company also has to be able to argue that the new policy is better. The change has to be disclosed in the FS.
Provided all is OK, the audit opinion does not have to be modified. If, for example, the change in policy was carried out incorrectly then an mdified opininowoudl be needed because the FS were not drawn up in accordance with the the accounting standard.
Is it ok to draw attention, about the change, in the emphasis of matter paragraph?
Changes in accountng policy are not normally important enough to warrant and EoM paragraph. EoM
An EoM is a paragraph included in the auditor’s report that refers to a matter appropriately presented or disclosed in the financial statements that, in the auditor’s judgment, is of such importance that it is fundamental to users’ understanding of the financial statements.
What if the firm changes it accounting policy and makes appropriate disclosure and the audit deems it to be correct, can such matter be included in the emphasis of matter paragraph
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