Emphasis of matter, other matter & explanatory paragraphs

Question 1

If a change occurred then auditor refers to the change in an emphasis of matter paragraph which is added to the auditor’s report. This paragraph would then

Answer 1

Refer to the financial statement note that discusses the change in detail
Exp- “ As discussed in Note X to the financial statements, the company changed its method accounting for income taxes in x2”

• This paragraph justifies change in accounting principle that is material to the financial statements* <– in this case, details concerning the results of audit procedures do not appear in the footnotes. Also, if management adequately discloses the uncertainty and the auditor agrees. Then no emphasis of matter paragraph is needed.

Question 2

When an auditor expresses an unmodified opinion & would not add emphasis of matter or mother matter paragraphs tot he report. This would be appropriate if the auditor

Answer 2

Believes that there is a probable likelihood of a material loss resulting form an uncertainty that is sufficiently supported & disclosed.

Question 3

US Auditing standards do not require

Answer 3

An emphasis of matter paragraph when an uncertainty is properly disclosed.

Question 4

US Auditing standards do not require

Answer 4

An emphasis of matter paragraph when an uncertainty is properly disclosed.

Question 5

In the auditor’s report, since the auditor has gathered sufficient evidence about consistency, there should be

Answer 5

No reference need be made in the report