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

For a change in depreciation method with no material effect currently, what type of report should the auditor issue?

1. Consistency modification.

2. "Except for" qualified opinion.

3. Emphasis-of-matter paragraph.

4. Unmodified opinion.

The correct answer is: Unmodified opinion.

When an entity changes its depreciation method and the change does not have a material effect on the financial statements, the auditor can issue an unmodified opinion. This type of opinion indicates that the financial statements present a true and fair view of the company's financial position and performance in accordance with the applicable financial reporting framework. In the context of changes in accounting principles, the auditor must evaluate whether the change is properly accounted for and disclosed. If the change is justified, properly recorded, and does not materially affect the financial statements, the auditor can give an unmodified opinion. This scenario reflects that, while there is a change in methodology, it does not alter the users' understanding of the financial results significantly. The other options represent different scenarios that would not apply here. A consistency modification might be used if the change materially affects the financial statements, which is not the case in this scenario. An "except for" qualified opinion would suggest there are reservations about a particular issue, which again would not fit if the change in method is effectively assessed as having no material impact. An emphasis-of-matter paragraph highlights certain aspects of the financial statements but is not warranted when no material effect exists. Thus, issuing an unmodified opinion is the most appropriate course of action in this situation