Emphasis of Matter vs Other Matter
Lesson:
Emphasis-of-Matter and Other-Matter sections exist within the audit report. They may sound similar, but they have very different purposes.
- Emphasis-of-Matter - Matters that are already presented or disclosed in the financial statements and are fundamental to users' understanding of the company's financial position, such as going concern issues, significant litigation, or changes in accounting principles.
- Other-Matter - Matters that are not disclosed in the financial statements but are relevant to users' understanding of the audit, the auditor's responsibilities, or the report itself, such as the fact that a predecessor auditor examined prior year financials, restrictions on the report's use, or information about supplementary schedules.
You're putting the final touches on an audit report.
Here are the relevant facts:
- The company has elected to omit substantially all disclosures required by GAAP, and had these been included, they might influence the user's conclusions.
Where should this information be placed?
Answer:
- Other-Matter
Explanation:
-
Matters that are not disclosed in the financial statements but are relevant to users' understanding of the audit, the auditor's responsibilities, or the report itself, such as the fact that a predecessor auditor examined prior year financials, restrictions on the report's use, or information about supplementary schedules.