Document ID: chunk:federal_register_of_legislation:F2023C00335:body:0:p7
Version: federal_register_of_legislation:F2023C00335
Segment Type: other
Provision Reference: 
Character Range: 17892–20949

of the matter to users' understanding of the financial report.

A3.             There may be a matter that is not determined to be a key audit matter in accordance with ASA 701 (i.e., because it did not require significant auditor attention), but which, in the auditor's judgement, is fundamental to users' understanding of the financial report (e.g., a subsequent event).  If the auditor considers it necessary to draw users' attention to such a matter, the matter is included in an Emphasis of Matter paragraph in the auditor's report in accordance with this ASA.

Circumstances in Which an Emphasis of Matter Paragraph May Be Necessary (Ref: Para. 4, 8)

A4.             Appendix 1 identifies Australian Auditing Standards that contain specific requirements for the auditor to include Emphasis of Matter paragraphs in the auditor's report in certain circumstances.  These circumstances include:

           * When the financial reporting framework prescribed by law or regulation would be unacceptable but for the fact that it is prescribed by law or regulation.

           * To alert users that the financial report is prepared in accordance with a special purpose framework.

           * 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).[6]

A5.             Examples of circumstances where the auditor may consider it necessary to include an Emphasis of Matter paragraph are:

           * An uncertainty relating to the future outcome of exceptional litigation or regulatory action.

           * A significant subsequent event that occurs between the date of the financial report and the date of the auditor's report.[7]

           * Early application (where permitted) of a new accounting standard that has a material effect on the financial report.

           * A major catastrophe that has had, or continues to have, a significant effect on the entity's financial position.

A6.             However, a widespread use of Emphasis of Matter paragraphs may diminish the effectiveness of the auditor's communication about such matters.

Including an Emphasis of Matter Paragraph in the Auditor's Report (Ref: Para. 9)

A7.             The inclusion of an Emphasis of Matter paragraph in the auditor's report does not affect the auditor's opinion.  An Emphasis of Matter paragraph is not a substitute for:

(a)                A modified opinion in accordance with ASA 705 when required by the circumstances of a specific audit engagement;

(b)                Disclosures in the financial report that the applicable financial reporting framework requires management to make, or that are otherwise necessary to achieve fair presentation; or

(c)                Reporting in accordance with ASA 570[8] when a material uncertainty exists relating to events or conditions that may cast significant doubt on an entity's ability to continue as a going concern.

A8.             Paragraphs A16–A17 provide further guidance on the placement of