Emphasis of Matter Paragraphs and
Other Matter Paragraphs in the
Independent Auditors Report
Prepared and Presented by
Dip...
 SCOPE
 Effective Date
 Objective
 Various terms and Definition
 Application and Other Explanatory material
 When auditor considers it necessary to draw
users attention to a/any matter:
Presented in financial statement
Other than...
 Beginning On or After April 1, 2011
 The main objective of this SA is to draw users
attention, by way of clear additional
communication in auditor’s report:
...
For the purpose of this SA the following terms
have meaning attributed below.
 Emphasis on matter paragraph
Matter approp...
 When the auditor decide to use emphasis on
matter paragraph the auditor shall:
1. Include immediately after opinion
para...
 The auditor shall include this paragraph
immediately after “Opinion paragraph” or
any “Emphasis on matter paragraph”
 T...
 If the auditor expects to include an emphasis
on matter paragraph or other matter
paragraph in the auditors report then
...
Examples of circumstances where the auditor may consider it necessary
to include Emphasis of Matter Paragraph are:
 An un...
Circumstances in which Other Matter Paragraph may
be necessary
Relevant to users understanding of audit
In the rare circum...
Reporting on more than one set of financial statement
An organization may prepare financial statements in accordance with
...
Inclusion of Other Matter Paragraph in auditors report
 Auditors are not allowed to disclose any other information
prohib...
Thank You
Dipendra Prasad Poudel
mailfordipendra@gmail.com
Infodipendra.blogspot.in
17th April 2014
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SA 706," Emphasis of Matter Paragraph and Other Matter Paragraph in the Independent auditors report"

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The very precise presentation regarding SA 706. It was prepared for technical session of Article Assistants in N.Kochhar and Co ( Chartered Accountants). Hope it will help you.

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SA 706," Emphasis of Matter Paragraph and Other Matter Paragraph in the Independent auditors report"

  1. 1. Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditors Report Prepared and Presented by Dipendra Prasad Poudel
  2. 2.  SCOPE  Effective Date  Objective  Various terms and Definition  Application and Other Explanatory material
  3. 3.  When auditor considers it necessary to draw users attention to a/any matter: Presented in financial statement Other than those presented in financial statement
  4. 4.  Beginning On or After April 1, 2011
  5. 5.  The main objective of this SA is to draw users attention, by way of clear additional communication in auditor’s report: 1. A matter although appropriately presented or disclosed in financial statements that is of such importance that it is fundamental to users understanding of the financial information 2. As appropriate, any other matter that is relevant to users understanding of the audit, the auditor responsibilities or the auditors report.
  6. 6. For the purpose of this SA the following terms have meaning attributed below.  Emphasis on matter paragraph Matter appropriately presented or disclosed in financial statements In auditors judgment it is fundamental to users understanding  Other matter paragraph matter other than those presented or disclosed In auditors judgment it is fundamental to users understanding.
  7. 7.  When the auditor decide to use emphasis on matter paragraph the auditor shall: 1. Include immediately after opinion paragraph in auditors report. 2. Use the heading of “ Emphasis of matter” or other appropriate heading. 3. Include in the paragraph a clear reference to the matter being emphasized and to where the matter can be found 4. Indicate that the auditors opinion is not modified in respect to matter emphasised
  8. 8.  The auditor shall include this paragraph immediately after “Opinion paragraph” or any “Emphasis on matter paragraph”  The auditor shall use the heading of “other matter paragraph” or other appropriate heading.
  9. 9.  If the auditor expects to include an emphasis on matter paragraph or other matter paragraph in the auditors report then auditor shall  communicate with TCWG regarding this expectation and proposed wording in the paragraph
  10. 10. Examples of circumstances where the auditor may consider it necessary to include Emphasis of Matter Paragraph are:  An uncertainty relating to future outcome of an exceptional litigation or regulatory action.  Early application (wherever permitted) of a new accounting standard that has pervasive effect. Including an emphasis of matter paragraphs in auditors report doesn’t affect the auditors opinion. Emphasis of matter paragraph is not substitute for either:  Providing qualified, adverse or disclaiming the audit opinion  Disclosure in the financial statements that the applicable financial reporting frameworks requires management to make Circumstances where Emphasis on Matter paragraph may be necessary
  11. 11. Circumstances in which Other Matter Paragraph may be necessary Relevant to users understanding of audit In the rare circumstances where the auditor is unable to resign from an engagement even though the possible effects of unable to obtain SAAE due to limitation imposed by management in Scope of the audit. Relevant to users understanding of Auditors Responsibilities or Audit report.  Law, regulation or generally accepted practice in the jurisdiction may require or permit the auditor to report or elaborate on matters that provides further explanation of auditors responsibilities in audit report.  An other matter paragraph doesn’t deal with the situation where auditor has other reporting responsibilities that are in addition to auditors responsibility under the SAs to report the financial statement.
  12. 12. Reporting on more than one set of financial statement An organization may prepare financial statements in accordance with general purpose framework (example: national framework) and another set of financial statement with another general purpose framework (example : IFRS) and engage auditor to report on both sets of financial statements If the auditor has determined both sets of financial statements then the auditor can insert other matter paragraph and insert the facts. Restriction on use of auditors report Financial report prepared for the specific purpose may be prepared in accordance with the intended users have determined that such general purpose financial information fulfill their needs. Since the auditor report is based for specific users the auditor may restrict the circulation of report and should be used by intended users only.
  13. 13. Inclusion of Other Matter Paragraph in auditors report  Auditors are not allowed to disclose any other information prohibited by law, regulation or other standards. (example : Ethical standards)  When the other matter paragraph is included in report then auditor shall include it immediately after emphasis on matter paragraph, if any or opinion paragraph. The suitable heading “other matter paragraph” or any other suitable heading can be provided.
  14. 14. Thank You Dipendra Prasad Poudel mailfordipendra@gmail.com Infodipendra.blogspot.in 17th April 2014

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