In short
An emphasis-of-matter paragraph is added to the auditor's report to draw users' attention to a matter that is appropriately presented or disclosed in the financial statements and is fundamental to their understanding.
Key takeaways
- It does not change the opinion.
- It is required in some cases, such as a justified change in accounting principle; in others it is the auditor's choice.
- An other-matter paragraph, by contrast, refers to matters not presented or disclosed in the statements.
Where it's tested
AUD: Audit Reports — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
A company changed from FIFO to weighted-average inventory costing. The change is justified, properly accounted for, and adequately disclosed. How should the auditor report?