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CS Professional · Compliance Management, Audit and Due Diligence · Forming an Opinion and Reporting

Mehta & Co. issues a report on Ranjit Foods Ltd that includes a Key Audit Matters section. The auditor also wants to include an Emphasis of Matter paragraph about a significant subsequent event. Which presentation is consistent with SA 706 (Revised)?

The paragraph may be placed directly before or after the Key Audit Matters section, depending on its relative significance, and the heading may carry added context such as 'Emphasis of Matter – Subsequent Event' so that it is distinguished from the individual key audit matters.

  1. APlace it only at the very end of the report after the signature
  2. BPlace it directly before or after the Key Audit Matters section, optionally headed 'Emphasis of Matter – Subsequent Event'Correct
  3. CMerge it into the Key Audit Matters section without a separate heading
  4. DPlace it only within the Basis of Opinion section

Explanation

When a Key Audit Matters section is presented, the Emphasis of Matter paragraph may sit directly before or after it, based on judgment of relative significance. The auditor may add context to the heading, such as 'Emphasis of Matter – Subsequent Event', to differentiate it from the individual key audit matters.

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