Amendments to ASA 706Amendments to ASA 706

Amendments to ASA 706

1. Existing paragraph A5 is amended to read as follows:

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, that is not an event or condition that may cast significant doubt on the entity’s ability to continue as a going concern.

 A significant subsequent event that occurs between the date of the financial report and the date of the auditor’s report.7

 …

1. Existing paragraph A7 is amended to read as follows:

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:

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

2. 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

3. 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.

4. Existing footnote 8 in paragraph A7 is amended to read as follows:

See ASA 570, paragraphs 34-3822–23.

1. Existing paragraph A16 is amended to read as follows:

The placement of an Emphasis of Matter paragraph or Other Matter paragraph in the auditor’s report depends on the nature of the information to be communicated, and the auditor’s judgement as to the relative significance of such information to intended users compared to other elements required to be reported in accordance with ASA 700. For example:

Emphasis of Matter Paragraphs

 When the Emphasis of Matter paragraph relates to the applicable financial reporting framework, including circumstances where the auditor determines that the financial reporting framework prescribed by law or regulation would otherwise be unacceptable,12 the auditor may consider it necessary to place the paragraph immediately following the Basis of OpinionGoing Concern or Material Uncertainty Related to Going Concern section to provide appropriate context to the auditor’s opinion.

 When a Key Audit Matters section is presented in the auditor’s report, an Emphasis of Matter paragraph may be presented either directly before or after the Key Audit Matters section, based on the auditor’s judgement as to the relative significance of the information included in the Emphasis of Matter paragraph. The auditor may also add further context to the heading “Emphasis of Matter”, such as “Emphasis of Matter–Subsequent Event”, to differentiate the Emphasis of Matter paragraph from the individual matters described in the Key Audit Matters section.