Emphasis of matter and other matters paragraph

Question 1

Identify the three issues for which an emphasis-of-matter paragraph is required.

Answer 1

1. )When there is substantial doubt about the entity’s ability to continue as a going concern
2. )When there is an inconsistency in accounting principles used
3. )When the financial statements are prepared in accordance with special purpose frameworks (such as cash basis, tax basis, regulatory basis, or contractual basis)

Question 2

What is meant by the term “emphasis-of-matter paragraph” in an auditor’s report?

Answer 2

A paragraph 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

Question 3

Where should an emphasis-of-matter or other-matter paragraph be presented in the auditor’s report?

Answer 3

1. )The emphasis-of-matter paragraph should be presented after the opinion paragraph.
2. )The other-matter paragraph should be presented after the opinion paragraph (and after any emphasis-of-matter paragraph(s)).

Question 4

What is meant by the term “other-matter paragraph” in an auditor’s report?

Answer 4

A paragraph that refers to a matter other than those presented or disclosed in the financial statements that, in the auditor’s judgment, is relevant to users’ understanding of the audit, the auditor’s responsibilities, or the auditor’s report