SA 706 lets an auditor add a paragraph to the report to draw attention to something the reader should not miss, without changing the opinion. An Emphasis of Matter paragraph points to a matter already disclosed in the financial statements. An Other Matter paragraph points to something outside the statements that helps readers understand the audit or the report.
Last reviewed: 17 October 2026. Facts checked. We opened the IAASB text of ISA 706 (Revised), which SA 706 mirrors, and the ICAI-hosted text of SA 700. We did not open the ICAI text of SA 706, so we do not quote its paragraph numbers. The examples below are the ones the international standard itself lists. The early-application example was checked against a search summary of the standard. The IAASB has issued a later revision of ISA 706 (a May 2026 version, effective for periods starting on or after 15 December 2026, per search results), which we did not open, so check the current SA 706 before you rely on the detail.
The two paragraphs in one table
| Emphasis of Matter (EOM) | Other Matter (OM) | |
|---|---|---|
| Points to | A matter presented or disclosed in the financial statements | A matter not presented or disclosed in the financial statements |
| Why | So important it is fundamental to users' understanding of the statements | Relevant to understanding the audit, the auditor's responsibilities or the report |
| Opinion | Not modified for this matter | Not modified for this matter |
| Heading | Must include the term "Emphasis of Matter" | "Other Matter" or another appropriate heading |
| Source of the content | Only information in the financial statements | Matters outside them |
Both come after the auditor has formed the opinion. They are a way to communicate, not a way to conclude.
When an Emphasis of Matter paragraph fits
The auditor may include one when it is needed to draw attention to a matter that is properly disclosed and fundamental to users, provided two things are true:
- The matter does not require a modified opinion under SA 705.
- Where key audit matters apply, the matter has not already been determined to be a key audit matter.
The international standard gives these examples of when one may be needed:
- An uncertainty about the outcome of exceptional litigation or regulatory action.
- A significant subsequent event between the balance sheet date and the date of the report.
- Early application, where allowed, of a new accounting standard that has a pervasive effect on the statements.
- A major catastrophe that has had, or continues to have, a significant effect on the entity's financial position.
Other standards require one in certain cases, for example when a framework prescribed by law would otherwise be unacceptable, or when the statements are prepared under a special purpose framework.
The standard also warns that widespread use of EOM paragraphs can weaken their effect. Use them sparingly.
What an EOM paragraph must do
- Sit in its own section with a heading that includes "Emphasis of Matter".
- Refer clearly to the matter and to where the full disclosure is in the financial statements.
- Refer only to information in the financial statements.
- State that the opinion is not modified in respect of the matter.
If the disclosure is missing or poor, an EOM does not fix it. That is a matter for SA 705. See our post on modified opinions under SA 705.
What an EOM paragraph is not
The standard is firm that it is not a substitute for:
- A modified opinion where the circumstances require one.
- Disclosures management must make under the reporting framework, or that are needed for a fair presentation.
- Reporting under the going concern standard where a material uncertainty exists.
It is also not a substitute for a key audit matter. Where SA 701 applies, individual key audit matters still need their own description. See key audit matters under SA 701. A matter that is not a key audit matter, because it did not need significant auditor attention, can still be fundamental to users. A subsequent event is the standard's own example. That is where an EOM fits.
When an Other Matter paragraph fits
The auditor may include one when a matter outside the financial statements is relevant to users' understanding of the audit, the auditor's responsibilities or the report, provided law or regulation does not prohibit it and the matter is not a key audit matter.
The international standard's examples include:
- Where law or practice requires the auditor to explain planning and scoping matters in the report.
- The rare case where the auditor cannot withdraw even though a management-imposed limitation has pervasive possible effects, and explains why.
- Where the entity has prepared more than one set of statements under different general purpose frameworks and the auditor has reported on both.
- Where a report prepared for a specific purpose is intended only for specific users and should not be distributed to others.
An OM does not cover other reporting duties that sit in the separate legal and regulatory section of the report, or additional procedures the auditor is asked to perform and report on. For the layout of those sections, read SA 700 and the audit report format.
Talk to those charged with governance first
If the auditor expects to include either paragraph, the standard requires communicating that expectation, and the proposed wording, to those charged with governance. This helps catch factual errors and avoids surprises. Note it in the working papers. Our audit documentation guide lists what to keep.
Quick drafting checklist
- Is the matter in the financial statements? Yes: EOM may fit. No: OM may fit.
- Would a modified opinion be required? If yes, SA 705 applies and an EOM alone is wrong.
- Is it already a key audit matter? If so, do not repeat it as an EOM.
- Is the heading right and is the "opinion not modified" statement present (for EOM)?
- Have you discussed the wording with those charged with governance?
- Is the paragraph short, factual and pointed at the note number?
Frequently Asked Questions
What is an emphasis of matter paragraph in simple words?
It is a short paragraph in the audit report that says "please read this note, it is important". The matter is already disclosed in the accounts, and the opinion is not changed by it.
Does an emphasis of matter mean the accounts are wrong?
No. If the accounts were wrong, the auditor would modify the opinion. An EOM draws attention to a properly disclosed matter.
What is the difference between EOM and other matter?
An EOM points to something inside the financial statements. An OM points to something outside them that helps readers understand the audit, the auditor's responsibilities or the report.
Can an EOM replace a qualified opinion?
No. The standard says it is not a substitute for a modified opinion when one is required.
Do I need to tell the company before adding one?
Yes. The standard requires communication with those charged with governance about the expectation and the wording.
Related Articles
- SA 705: modified opinions explained
- Types of audit opinion in India
- Key audit matters under SA 701
- Going concern indicators and financial data
The going concern indicator scorer can help you test a going concern question before you decide how to report it.
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