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EMP – Master Answer Old Course —
QNO Bhaskar CNO - SA706.020 (N17E/N19M/N20M/N20R/N20E/M18E/M19R/SM
706.01 20/SM21/N21M/N22M/N22R)
New Course--(SM25)
Define Emphasis of Matter paragraph. When the auditor shall include an Emphasis of Matter paragraph in
the auditor’s report? Also explain how the auditor would include an Emphasis of Matter in the auditor’s
report.
OR
Define Emphasis of Matter Paragraph and how it should be disclosed in the Independent Auditor's Report?
OR
What is an Emphasis of Matter paragraph, when it is used, and manner of its use in an audit report?
Answer ➢ Definition
A paragraph included in the auditor’s report that refers to a matter appropriately presented or
disclosed in the financial statements that, in the auditor’s judgment, is of such importance that it is
fundamental to users’ understanding of the financial statements.
➢ Conditions
If the auditor considers it necessary to draw users’ attention to a matter presented or disclosed in the
financial statements that, in the auditor’s judgment, is of such importance that it is fundamental to
users’ understanding of the financial statements, the auditor shall include an Emphasis of Matter
paragraph in the auditor’s report provided:
• The auditor would not be required to modify the opinion in accordance with SA 705
(Revised) as a result of the matter; and
• When SA 701 applies, the matter has not been determined to be a key audit matter to be
communicated in the auditor’s report.
➢ Content
When the auditor includes an Emphasis of Matter paragraph in the auditor’s report, the auditor shall:
• Include the paragraph within a separate section of the auditor’s report with an appropriate
heading that includes the term “Emphasis of 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 (No need to give reference of BOD report, Annual Report etc.)
• Indicate that the auditor’s opinion is not modified in respect of the matter emphasized.

QNO-- Examples for Emphasis of Matter Para New Course – (M24R/S24M)
706.40 Bhaskar CNO – SA706.020

Mention some examples of circumstances where the auditor may consider it necessary to include an
Emphasis of Matter paragraph.
OR
Pure Services Limited is into the litigation relating to some legal action initiated by the industry regulator.
The matter has reached jurisdictional High Court. Keeping in view uncertainty related to future outcome
of matter, statutory auditor of the company has decided to include Emphasis of Matter (EOM) Paragraph

in auditor’s report.
i. Briefly discuss the considerations to be taken care of by the statutory auditor when EOM
paragraph is included in auditor’s report.
ii.
iii. State any two examples of circumstances where the auditor may consider it necessary to include
an EOM paragraph.
Answer Examples of circumstances to include Emphasis of Matter Paragraph:

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