Emphasis-of-Matter, Other-Matter, and Explanatory Flashcards
What is Emphasis of Matter? - non-issuer
-Appropriately presented or disclosed but you want to bring it to the readers attention. “JUSTIFIED”
-after opinion para.. but before other matters
-reasons for…
G - Going Concern
A - Accounting Principal
A - Audit Opinion changes
SP - Special Purpose Framework
- Probable - accrue & disclose
- Reasonable Possible - disclose
- Remote - ignore
lawsuits - normally not included in paragraph unless “unusually important”
Other-Matter Paragraphs - non-issuer
- paragraph is after opinion & emphasis-of-matters
- change in audit opinion
- restrict use of report
- prior statements audited by prior auditor is not presented.
- prior statements not audited.
- material inconsistency
- supplemental info
- report on compliance
- may if…. why auditor cannot withdrawal, further explanation of the auditors responsibilities, prepared in accordance with a different general-purpose framework.
Explanatory Paragraph - Issuer
- does not affect auditors opinion
- generally follows opinion paragraph.
- required if… going concern, material change, change in a reporting entity, change in a investee, corrected, other info is inconsistent, required by SEC, omitted, supplementary info, prior year audit report is not presented, prior year opinion us updated, required to report on the company’s internal controls.
Explanatory Paragraph - no title if…
- prior year audit report is not presented
- prior year opinion is updated
- required to report on the company’s internal controls over financial reporting but such report is not required to be audited.
Lack of Consistency - acceptability of change
-newly adopted principle
-method of accounting
-disclosures
-preferable
If, all four are met then the auditor should include and emphasis-of-matter paragraph.
Change in estimate…..
is NOT a consistency issue
Alert! that restricts its use - Other-matter paragraph
- suitable for only a limited number of users.
- available only to specified parties
