Auditing and Attestation- Certified Public Accountant (CPA) Practice Exam -

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When a change in accounting principles is not material, what should the auditor do in their report?

Refer to the change in an emphasis-of-matter paragraph.
Not refer to the change in the auditor's report.
Refer to the note in the financial statements that discusses the change.
Explicitly state whether the change conforms with GAAP.

The correct answer is: Not refer to the change in the auditor's report.

When a change in accounting principles is deemed not material, the auditor should not refer to this change in the auditor's report. This is because a fundamental principle of auditing is that materiality is a key factor in determining the content and focus of the auditor's communication. If the change is not material, it does not influence the financial statements sufficiently to warrant a highlight in the audit report. The audit report aims to provide a clear and accurate view of the financial statements, and including non-material changes could unnecessarily clutter the report and distract from more significant matters that do deserve attention. In contrast, if the change were material, the auditor would typically need to reference it, either in the audit report itself or within specific notes to the financial statements, to ensure that users of the financial statements are adequately informed. Therefore, since the change in question is not material, omitting it from the auditor's report aligns with the purpose of presenting a clear and relevant audit opinion.