Statements for December are produced and mailed in January. Should the cost of production/mailing be expensed in January when the work is done, or should the cost be accrued in December to match the cost with the period to which it relates?

Is it a material cost? What did you do last year?

Why would your accounting change for just this month. It should be treated the same every month. You should not go back to last year, just go back to last month. I highly doubt that such an expenses qualifies for accrual in the first place.

Previous auditors and our internal auditor have said the costs for mailing the Dec statement should be accrued in Dec, so that is what we have always done. However, I have always questioned that since it is not consistent with, for example, how audit fees are treated. The external audit fee to audit the 2012 financials is NOT accrued in 2012 to match the period it relates to but rather is expensed in the following year when the work is done. So the treatment of statement costs seems inconsistent, although there are many inconsistencies in accounting. Just wondering what standard industry practice may be.

RL is probably right.
You can google and find pretty easily the guidance on expense recognition however; unless your costs are pretty significant each month or vary significantly month to month. Regardless of what is right, the difference to be "proper" is likely not material. If you have posted 12 months of the expense in a given year, the only difference would be rather small and likely not worth the effort to make it "proper".

You should be able to prove this out by looking at the impact of his recommendation (as he should have) for the last year and see what the difference would have been.

To correct it now would skew one period or the other, and or require prior period adjustments, etc. so that you dont have a year that shows 11 or 13 months of expense right?

I am an internal auditor and a CPA, so I have some perspective, but if I were in your place, I would want to pat this guy on the head, and say thanks anyway.

I cannot believe your external auditors would get involved in this. This cost could not be material to them.