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

The auditor of Kaveri Pharma Ltd includes a Key Audit Matters section in the report and also considers an Emphasis of Matter paragraph necessary 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 the auditor's judgment of its relative significance. The auditor may also add context to the heading, such as 'Emphasis of Matter – Subsequent Event', to differentiate it from the key audit matters.

  1. APlace the paragraph directly before or after the Key Audit Matters section, based on its relative significance, optionally titled 'Emphasis of Matter – Subsequent Event'Correct
  2. BPlace it only inside the Key Audit Matters section as one of the individual matters
  3. CPlace it only after the Report on Other Legal and Regulatory Requirements section
  4. DOmit the heading context, because adding context to the heading is prohibited

Explanation

SA 706 (Revised) says that where a Key Audit Matters section exists, an Emphasis of Matter paragraph may be presented directly before or after it, by the auditor's judgment of significance. The auditor may add context to the heading to differentiate it from the individual key audit matters. Option D is wrong because adding context is permitted.

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