SA 706 — Emphasis of Matter and Other Matter Paragraphs (Revised)

Issued by ICAI AASB · Reporting

Drawing attention without modifying the opinion.

Objective

To draw users' attention to matters of fundamental importance (Emphasis of Matter) or relevant other matters (Other Matter), without modifying the opinion.

Key requirements

Emphasis of Matter only for matters appropriately presented / disclosed in the FS
Placed after the Opinion section, before the Basis for Opinion
Clear statement that the opinion is not modified
Other Matter paragraphs for matters not required to be disclosed in the FS but relevant to users' understanding of the audit

Typical procedures

EoM language drafted with reference to the specific FS note
Verification that the matter is appropriately disclosed before adding EoM

Common pitfalls

EoM used as a workaround to avoid a real modification
EoM drafted in a way that suggests reservation about the opinion
Reference to a FS note that doesn't actually exist

SA 706 in practice

SA 706 sits in the Reporting phase of the audit. The Standards on Auditing are issued by the ICAI Auditing and Assurance Standards Board (AASB) and deemed to be prescribed by the Central Government under Section 143(10) of the Companies Act 2013. Compliance with SAs is mandatory for every audit conducted by a Chartered Accountant in India.

For authoritative text, refer to the ICAI AASB Compendium of Standards on Auditing at icai.org.

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SA 705 — Modifications to the Opinion (Revised)