Understanding the Role of Auditor’s Opinion and Emphasis of Matter Paragraph in Financial Statement Reporting

The auditor shall form an opinion on whether the financial statements are prepared, in all material respects and are in accordance with the applicable financial reporting framework. Based on the evaluation of audit evidence obtained, the auditor may either express a modified opinion or an unmodified opinion in the auditor’s report.

However, where the auditor intends to draw users’ attention to a matter or matters presented or disclosed in the financial statements that are of such importance that they are fundamental to users understanding of the financial statements, the auditor shall include Emphasis of Matter Paragraph (EOM) in the audit report.

Since the EOM included by the auditor for additional communication of facts acts like an opinion of the auditor, it often leads to confusion on whether the inclusion of the Emphasis of Matter paragraph is a substitute for expressing a modified opinion.

To understand the requirements and scenarios where auditors should follow the appropriate standards to issue an accurate audit report.

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