Circumstances where an "emphasis of a matter" paragraph may be necessary include
A)an uncertainty relating to the prior outcome of exceptional litigation or regulatory action
B)early application (where permitted)of a new accounting standard that has a pervasive effect on the financial statements in advance of its effective date
C)a major catastrophe that has had,or continues to have,a minor effect on the entity's financial position
D)insignificant transactions with related parties
E)unusually important subsequent events
F)both A and C
G)both B and E
H)both D and E

Question

Quizplus · Accepted Answer

An "emphasis of a matter" paragraph is used by auditors in their report to draw attention to matters that are of such importance that they are fundamental to users' understanding of the financial statements. Early application of a new accounting standard that has a pervasive effect on the financial statements (B) and unusually important subsequent events (E) are examples of circumstances where such a paragraph may be necessary.

Circumstances Where an "Emphasis of a Matter" Paragraph May Be