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CA Ravi Taori

1A. SAs that contain specific requirements for the auditor to include Emphasis of Matter paragraphs in
the auditor’s report in certain circumstances.
1. (SA 210) Framework Prescribed by Law or Regulation: When a financial reporting framework prescribed
by law or regulation would be unacceptable but for the fact that it is prescribed by law or regulation.
2. (SA 560) Subsequent Events: When facts become known to the auditor after the date of the auditor’s report
and the auditor provides a new or amended auditor’s report (i.e., subsequent events).
3. (SA 800) Special Purpose Framework: To alert users that the financial statements are prepared in accordance
with a special purpose framework.
1B. Circumstances where the auditor may consider it necessary to include an Emphasis of Matter
paragraph are:
(End of the year) Legal Uncertainty: The auditor may include an Emphasis of Matter paragraph for
uncertainties related to the outcome of exceptional litigation or regulatory action.
(After year end) Subsequent Event: The inclusion of an Emphasis of Matter paragraph may be necessary for
significant events that occur between the date of the financial statements and the date of the auditor's report.
(Start of the year) New Standard Application: Early application (where permitted) of a new accounting
standard that materially affects the financial statements may warrant an Emphasis of Matter paragraph.
(During the year) Major Catastrophe: A major catastrophe that significantly impacts the entity's financial
position can be a reason for including an Emphasis of Matter paragraph.
III. Heading & Content of EMP:
When the auditor includes an Emphasis of Matter paragraph in the auditor’s report, the auditor shall:
Paragraph with Appropriate Heading: Include the paragraph within a separate section of the auditor’s report
with an appropriate heading that includes the term “Emphasis of Matter”;
Reference to the Emphasized Matter: Include in the paragraph a clear reference to the matter being emphasized
and to where relevant disclosures that fully describe the matter can be found in the financial statements. The
paragraph shall refer only to information presented or disclosed in the financial statements; and
Unmodified Auditor’s Opinion: Indicate that the auditor’s opinion is not modified in respect of the matter
emphasized.

IV. Placement
➢ If EMP relates to applicable FRF (E.g. :- If it is related to shift from AS to Ind AS, then in such circumstances
it should be placed immediately below 'basis of opinion' section to increase its importance.)
➢ In other cases. EMP can be presented either before or after 'key audit matter' based on auditor's judgement
as to relative significance given in EMP (E.g.: - If prior period item is very significant, changing profits
drastically than EMP may be placed before 'key audit matter'.)

(CNO - SA 706.060) I. When to issue other Matter Paragraphs in the Auditor’s Report?
1. Criteria for other of Matter Paragraph: Issuing Other Matter Paragraphs: When to issue other Matter
Paragraphs in the Auditor’s Report? If the auditor considers it necessary to communicate a matter other than
those that are presented or disclosed in the financial statements that, in the auditor’s judgment, is relevant to
users’ understanding of the audit, the auditor’s responsibilities or the auditor’s report, the auditor shall include
an Other Matter paragraph in the auditor’s report, provided:

2. Restriction:
2A. No Prohibition: This is not prohibited by law or regulation; and
2B. No KAM: When SA 701 applies, the matter has not been determined to be a key audit matter to be
communicated in the auditor’s report.
II. Examples
➢ Examples (We have arranged in chronological flow so that it is easy to remember)

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