Emphasis-Of-Matter and Other-Matter Paragraphs

Question 1

Define Emphasis-of-matter:

Answer 1

Paragraph that refers to a matter:

- Presented or disclosed in the financial statements that is of significant importance

Question 2

Define Other-Matter Paragraph:

Answer 2

Paragraph referring to

• Auditors Report or Auditor responsibility
• Help users understanding of the audit

Question 3

Where is the emphasis of matter paragraph located?

Answer 3

After the opinion paragraph
Reference the matter and where disclosure can be found
Indicate that the audit opinion is not modified

Question 4

When do you required to have an emphasis of matter paragraph?

Answer 4

YOU MUST ADD:

1) Going concern
2) Inconsistency with accounting principles
3) Prepared in accordance with a special purpose frameworks

ALSO YOU CAN ADD:

• Uncertainty as to outcome of important litigation or regulatory action
• Significant event
• Significant events with related parties

Question 5

Where does the other-matter paragraph go?

Answer 5

After opinion and after emphasis of matter

Question 6

T/F: Emphasis or matter paragraphs and other matter paragraphs require a unique heading?

Answer 6

TRUE

You must label the two paragraphs as emphasis or matter and/or other matter paragraph

Question 7

When are the auditors required to include a other-matter paragraph?

Answer 7

1) Modified opinion due to a misstatement and management has now corrected that opinion, that previous identified misstatement has been corrected. The auditor can now give an unmodified opinion. The auditor would add an other matter paragraph to show that change.
2) When reporting on more than one set of F/S (one using GAAP and another using IFRS) reference the other report
3) Pervaisive scope limitation- which would be accompanied by a disclaimer of opinion

Question 8

T/F: Do the auditors have to communicate the proposed wording of the emphasis of matter or other matter paragraphs?

Answer 8

TRUE!