Emphasis of Matter & Limitation of scope

Home Forums Ask ACCA Tutor Forums Ask the Tutor ACCA F8 Exams Emphasis of Matter & Limitation of scope

This topic contains 4 replies, has 3 voices, and was last updated by Avatar of Salman Salman 3 years, 11 months ago. This post has been viewed 124 times

Viewing 5 posts - 1 through 5 (of 5 total)
  • Author
    Posts

  • avatar
    lindas
    Member
    • Topics: 2
    • Replies: 0

    Hello,

    I thought i had a grasp on the reports but ive started to confuse myself again. When is it appropriate to use a limitation of scope over an emphasis of matter paragraph. as I am away even if an inherent uncertainty becomes a significant/fundamental uncertainty it is still addressed in an emphasis of matter paragraph as long as appropriate discolsures are made. However, would a fundamental uncertainty not indicate a limitation of scope? or a disclaimer where pervasive??

    Pleaser help mt brain is going in circles!thank you so much

    Linda


    Avatar of gromit
    gromit
    Participant
    • Topics: 1
    • Replies: 1471

    I think some of your terminology is out of date, particularly since the Clarity Project (relevant to June 2010).
    Audit reports can be modified by:
    1 an emphasis of matter paragraph (not a qualification);
    2 being qualified.
    An emphasis of matter paragraph refers to something that is already properly disclosed in the accounts. This could be a note referring to something like pending litigation where the outcome is uncertain. Or it could refer to an important non-adjusting event that occurred after the period end. As defined by the UK Financial Reporting Council, an 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.”
    The two types of qualification are now:
    1 That the accounts contain a material misstatement (previously known as disagreement)
    2 That the auditors have not been able to obtain sufficient appropriate audit evidence (previously known as limitation in scope.)
    Both qualifications can still be ‘except for’ or pervasive.
    The term ‘inherent uncertainty’ appears neither in the FRC’s glossary nor, for example, in BPP’s F8 text. I can’t trace when it went out of favour, but it doesn’t seem to be used now.
    HTH


    Avatar of Salman
    Salman
    Participant
    • Topics: 6
    • Replies: 126

    @gromit said:

    The two types of qualification are now:

    1 That the accounts contain a material misstatement (previously known as disagreement)
    2 That the auditors have been able to obtain sufficient appropriate audit evidence (previously known as limitation in scope

    Dear Gromit,

    Don’t know why but maybe i am wrong but shouldn’t the second qualification should be like this:

    2.2 That the auditors have NOT been able to obtain sufficient appropriate audit evidence (previously known as limitation in scope.

    I din’t edit your post cuz maybe i am wrong :S


    Avatar of gromit
    gromit
    Participant
    • Topics: 1
    • Replies: 1471

    You are completely right – I had left out the important word ‘not’!

    I’ve edited the post to save others confusion. Thanks for pointing out the error.

    Gromit


    Avatar of Salman
    Salman
    Participant
    • Topics: 6
    • Replies: 126

    No problem :D

Viewing 5 posts - 1 through 5 (of 5 total)

You must be logged in to reply to this topic.