The document outlines the guidelines for auditors on including emphasis of matter and other matter paragraphs in their reports. It details the objectives, necessary criteria for use, and communication requirements when such paragraphs are added to draw users' attention to important matters. The guidelines ensure that the auditor's opinion remains unmodified and that reporting adheres to relevant laws and standards.

1. Emphasis of Matter Paragraphs and
Other Matter Paragraphs in the
Independent Auditors Report
Prepared and Presented by
Dipendra Prasad Poudel

2.  SCOPE
 Effective Date
 Objective
 Various terms and Definition
 Application and Other Explanatory material

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.  Beginning On or After April 1, 2011

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. 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.  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.  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.  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. 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. 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. 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. 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. Thank You
Dipendra Prasad Poudel
mailfordipendra@gmail.com
Infodipendra.blogspot.in
17th April 2014