Emphasis-of-Matter vs Other-Matter Paragraphs in the Audit Report
By SimplyCPA · 11 October 2026
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- Emphasis-of-matter: Draws attention to something already properly presented or disclosed in the financial statements that is fundamental to users' understanding.
- Other-matter: Covers something not presented or disclosed in the financial statements but relevant to users' understanding of the audit, the auditor's responsibilities or the report.
- Neither modifies the opinion: The opinion stays as it is — unmodified, unless something else requires a modification.
- Typical emphasis-of-matter: A major litigation uncertainty, a major catastrophe, significant related-party transactions or a change in accounting principle.
- Typical other-matter: Prior-year statements audited by another auditor, a restricted-use report, or supplementary information.
The core distinction
Under AU-C 706, both paragraphs are added to an auditor's report at the auditor's judgement (or when another standard requires one). The difference is whether the matter is inside the financial statements.
| Emphasis-of-matter | Other-matter | |
|---|---|---|
| Refers to | A matter appropriately presented or disclosed in the financial statements | A matter not presented or disclosed in the financial statements |
| Why include it | It's fundamental to users' understanding of the statements | It's relevant to users' understanding of the audit, the auditor's responsibilities or the report |
| Heading | "Emphasis of Matter" (or a more descriptive heading) | "Other Matter" (or a more descriptive heading) |
| Effect on opinion | None — the paragraph must state that the opinion is not modified with respect to the matter | |
Common examples
Emphasis-of-matter
- An uncertainty about the outcome of major litigation or regulatory action.
- A significant subsequent event, such as a major catastrophe after year-end.
- Significant transactions with related parties.
- A justified change in accounting principle that has a material effect (a consistency paragraph).
- Financial statements prepared on a special purpose framework, such as the cash or tax basis.
Other-matter
- Prior-year financial statements were audited by a predecessor auditor.
- Prior-year statements were not audited, or were reviewed or compiled instead.
- Restricting the use or distribution of the report.
- Reporting on supplementary information that accompanies the statements.
Exam trap: An emphasis-of-matter paragraph can't be used as a substitute for a modified opinion, or for disclosures management should have made. If the disclosure isn't adequate, the problem is a misstatement — think qualified or adverse, not emphasis.
Going concern is different
Substantial doubt about going concern has its own required section — "Substantial Doubt About the Entity's Ability to Continue as a Going Concern" — under AU-C 570, rather than a general emphasis-of-matter paragraph. See going concern in auditing.
Practise report wording in our AUD audit reports notes.