Emphasis of Matter and Other Matter Paragraphs in the Auditor’s Report

Emphasis of Matter Paragraph in the Auditor’s Report

Emphasis of Matter paragraph 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.

When the auditor includes an Emphasis of Matter paragraph in the auditor’s report, the auditor shall:

· Include the paragraph within a separate section of the auditor’s report with an appropriate heading that includes the term “Emphasis of Matter.”

· Include in the paragraph a clear reference to the matter being emphasized and to where relevant disclosures can be found in the financial statements. The paragraph shall refer only to information presented or disclosed in the financial statements.

· Indicate that the auditor’s opinion is not modified in respect of the matter.

Examples of circumstances in which auditors include “an Emphasis of Matter paragraph” in the audit report.

Examples of circumstances where the auditor may consider it necessary to include an Emphasis of Matter paragraph are:

● An uncertainty relating to the future outcome of exceptional litigation or regulatory action.

● A significant subsequent event that occurs between the date of the financial statements and the date of the auditor’s report.

● Early application (where permitted) of a new accounting standard that has a material effect on the financial statements.

● A major catastrophe that has had, or continues to have, a significant effect on the entity’s financial position.

Emphasis of Matter paragraph in the auditor’s report and the auditor’s opinion

The inclusion of an Emphasis of Matter paragraph in the auditor’s report does not affect the auditor’s opinion. An Emphasis of Matter paragraph is not a substitute for:

(a) A modified opinion.

(b) Reporting when a material uncertainty exists relating to events or conditions that may cast significant doubt on an entity’s ability to continue as a going concern.


Other Matter Paragraph in in the Auditor’s Report

Other Matter paragraph is a paragraph included in the auditor’s report that refers to a matter other than those presented or disclosed in the financial statements that, in the auditor’s judgment, is relevant to users’ understanding of the audit, the auditor’s responsibilities or the auditor’s report.

When the auditor includes an Other Matter paragraph in the auditor’s report, the auditor shall include the paragraph within a separate section with the heading “Other Matter,” and communicate with those charged with governance regarding this expectation and the wording of this paragraph.

Circumstances in which other matter paragraph may be necessary.

      (a) Relevant to Users’ Understanding of the Audit.

Law or regulation may require the auditor to communicate about planning and scoping matters in the auditor’s report, or the auditor may consider it necessary to communicate about such matters in an Other Matter paragraph.

(b) Relevant to Users’ Understanding of the Auditor’s Responsibilities or the Auditor’s Report.

Law and regulations in some jurisdictions may require the auditor to concretize on matters that provide further explanation of the auditor’s responsibilities in the audit of the financial statements.

(c) Reporting on more than one set of financial statements.

An entity may prepare one set of financial statements in accordance with a general purpose framework and another set of financial statements in accordance with another general purpose framework.

(d)  Restriction on distribution or use of the auditor’s report.

If financial statements prepared for a specific purpose for specific users the auditor may include an Other Matter paragraph, stating that the auditor’s report is intended solely for the intended users, and should not be distributed to or used by other parties.


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