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can anyone please tell me about the “emphasis of matter paragraph” and when it is exactly used..
thanks neeru
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Emphasis of matter paragraph is used to highlight matters that are ALREADY presented and disclosed in the financial statements, that in the auditor’s judgment, it’s of importance to the user’s knowledge of the financial statements.
It is used ONLY when the auditors had obtain sufficient and appropriate audit evidence to support that the matter is correctly and adequately disclosed/presented.
Emphasis of matter paragraph is usually used in:
Uncertainties for going concern matters, which is already disclosed in the notes to financial statements
Early adoption of standards (it is inline with the accounting standards, thus no disagreement, but the changes in accounting treatment is so great, that, in the auditor’s judgment, if not disclosed, will cause users to misinterpret the Financial statements)One main point of Emphasis of matter paragraph is that, it is in no way a qualification of audit opinion (due to disagreement or uncertainties)
Thank u very much cloudeu ….its clear to me now .
Just to confirm……”so Emphasis of matter paragraph is only about giving information to the users of financial statement that the auditor thinks the users should be aware of”…right?
thank uNeed to emphasise that an emphasis of matter paragraph adds NOTHING to the fin stats – it simply draws the readers’ attention to something which is already disclosed within the fin stats
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It would be easier to understand with an illustration.
An example of emphasis of matter paragraph provided by the ISA 706.
Emphasis of Matter
We draw attention to Note X to the financial statements which describes the
uncertainty related to the outcome of the lawsuit filed against the company by XYZ
Company. Our opinion is not qualified in respect of this matter.As you can see, it merely highlight the matter and have a clear REFERENCE to the notes to financial statements. Of course, page number could also included in it.
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