Wiley Practitioner's Guide to GAAS 2020

32AU-C 706 Emphasis-of-Matter Paragraphs and Other-Matter Paragraphs in the Independent Auditor’s Report

Scope

Definitions of Terms

Objective

Requirements

Emphasis-of-Matter and Other-Matter Paragraphs

Emphasis-of-Matter Paragraph

Other Matters in the Auditor’s Report

Communication

AU-C 706 Illustrations

Illustration 1. An Auditor’s Report with an Emphasis-of-Matter Paragraph Because There Is Uncertainty Relating to a Pending Unusually Important Litigation Matter

Illustration 2. An Auditor’s Report With an Other-Matter Paragraph That May Be Appropriate When an Auditor Issues an Updated Report on the Financial Statements of a Prior Period That Contains an Opinion Different from the Opinion Previously Expressed

Illustration 3. An Auditor’s Report with a Qualified Opinion Due to a Material Misstatement of the Financial Statements and an Emphasis-of-Matter Paragraph Because There Is Uncertainty Relating to a Pending Unusually Important Litigation Matter

SCOPE

AU-C 706 provides guidance when the auditors consider it necessary to draw users’ attention to matters:

• Presented or disclosed in the financial statements in an emphasis-of-matter paragraph or
• Other than those presented or disclosed in the financial statements in an other-matter paragraph. (AU-C 706.01)

DEFINITIONS OF TERMS

Source: AU-C 706.07. For definitions related to this standard, see Appendix A, “Definitions of Terms”: Emphasis-of-matter paragraph, Other-matter paragraph.

OBJECTIVE

The objective of the auditor, ...