ISA 706 (Revised) DEALS with additional communication in the auditor’s report when the auditor CONSIDERS it necessary to Include (a) Emphasis of Matter Paragraph, AND (b) Other Matter Paragraph.
Table of Contents
ISA 706 (Revised) – Introduction
1. Scope of this ISA
It deals with additional communication responsibilities in the auditor’s report.
2. Effective Date
This ISA is EFFECTIVE for audits of financial statements for periods ending on or after December 15, 2016.
ISA 706 – Objective
The Objective of the auditor having formed an opinion on the Financial Statements is to DRAW User’s attention when in the auditor’s judgment it is Necessary to do so by way of clear additional communication in the auditor’s report, to (a) Emphasis of Matter Paragraph, OR (b) Other Matter Paragraph.
ISA 706 – Definitions
1. Emphasis of Matter Paragraph
A ‘Paragraph’ INCLUDED in the auditor’s report that refers to a Matter appropriately presented or disclosed in the financial statements that in the auditor’s Judgment is of such Importance that it is fundamental to user’s understanding of the ‘Financial Statements’.
2. Other Matter Paragraph
A ‘Paragraph’ INCLUDED in the auditor’s report that refers to a Matter other than those presented or disclosed in the financial statements that in the auditor’s Judgment is relevant to user’s understanding of the audit, the auditor’s responsibilities or the auditor’s report.
ISA 706 – Requirements
1. Emphasis of Matter Paragraphs in the Auditor’s Report
The ‘Auditor’ shall INCLUDE an ‘Emphasis of Matter Paragraph‘ in the Auditor’s Report provided:
- The auditor would NOT be Required to MODIFY the opinion in accordance with ISA 705 (Revised) as a result of the Matter; AND
- When ISA 701 applies, the Matter has NOT been determined to be a ‘Key Audit Matter’ to be communicated in the auditor’s report.
The ‘Auditor’ shall INCLUDE the Paragraph within a Separate Section of the auditor’s report with an appropriate heading that Includes the term ‘Emphasis of Matter’.
2. Other Matter Paragraphs in the Auditor’s Report
| The Auditor Shall INCLUDE an ‘Other Matter Paragraph’ in the auditor’s Report Provided: |
|---|
| (a) This is NOT prohibited by law or regulation; AND |
| (b) When ISA 701 applies, the Matter has NOT been determined to be a ‘Key Audit Matter’ to be communicated in the auditor’s report. |
The ‘Auditor’ shall INCLUDE the Paragraph within a Separate Section with the heading ‘Other Matter’, or other appropriate heading.
3. Communication with Those Charged with Governance
If the auditor Expects to Include an ‘Emphasis of Matter’ or ‘Other Matter’ paragraph in the auditor’s report, the auditor shall COMMUNICATE with those charged with governance regarding this expectation and the wording of the paragraph.
Synopsis
ISA 706 ‘Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor’s Report‘ DEALS with additional communication in the auditor’s report when the auditor considers it necessary to Include (a) Emphasis of Matter Paragraph, AND (b) Other Matter Paragraph.
[700-799] Audit Conclusions and Reporting
Chartered Accountant (Institute of Chartered Accountants of Pakistan)
Bachelor of Accounting Honours (Asia e University, Malaysia)