FYI: Change in Accounting Principle The auditor should evaluate a change in accounting principles about four matters:

1 Whether the adopted principle is in accordance with the applicable financial reporting framework; 2. Whether the method of accounting for the effect of the change is in accordance with the applicable financial reporting framework; 3. Whether the disclosures about the change are adequate; 4. Whether the entity has justified that the alternative adopted is preferable. (The issuance of an accounting pronouncement that requires or expresses a preference for an accounting principle is considered sufficient justification for a change in principle.) **When these four criteria ARE MET - include an Emphasis-of-matter paragraph to describe the change and reference the applicable disclosure** **When the criteria IS NOT MET - evaluate whether the change results in a material misstatement and consider whether the opinion should be modified.**