Wiley Practitioner's Guide to GAAS 2022

34AU-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 Paragraph
  • Other Matters in the Auditor's Report
  • Communication
• AU-C 706 Illustrations

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 that are of such importance that they are fundamental to the users’ understanding in an emphasis-of-matter paragraph or
• Other than those presented or disclosed in the financial statements that are relevant to users’ understanding of the audit, the auditor's responsibilities, or the auditor's report (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, having formed an opinion on the financial statements, is to draw users’ attention, when in the auditor's judgment it is necessary to do so, by way of clear additional communication in the auditor's report, to

1. a matter, although appropriately presented or disclosed in the financial statements, that is of such importance that it is fundamental to users’ understanding of the financial statements or
2. as appropriate, any other matter that is relevant to users’ understanding of the audit, the auditor's responsibilities, ...