Acca aa s21 Notes

2. Emphasis of matter and other matters
An emphasis of matter is where there is a paragraph in the auditor’s report which draws attention to 
some matter 
already properly disclosed within the financial statements
. Such a paragraph does 
not affect the audit opinion: it is simply drawing attention to an important note in the financial 
statements that shareholders ought to be aware of to properly appreciate the financial statements.
Here is an example:
We draw attention to Note 27 to the financial statements, which describes the effects of a fire in 
the Company's warehouse. Our opinion is not modified in respect of this matter.
Note that the financial statements do contain a note explaining the effects of the fire. The financial 
statements are therefore as comprehensive and as open as they can be. But obviously, the fire has 
operational and financial implications and to understand the company's position (e.g. its ability to pay 
dividends next year), the users of the financial statements need to be aware of this.
Therefore the auditor use the auditor’s report to emphasise this matter (and remember many readers 
don’t get far past the auditor’s report and very few pore over the notes) and to draw users’ attention 
to it.
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An "other matters" paragraph refers to something which is NOT in the financial statements, nor 
should be. The commonest example is when something in the directors’ report contradicts what is in 
the financial statements and the auditor should point out the discrepancy in case users are misled by 
the directors’ claims. Therefore an other matters paragraph is added to explain the contradiction.
The emphasis of matter paragraph generally comes directly after the basis of opinion paragraph. It 
stresses that this does not mean that the financial statements are ‘qualified’, wrong or in any way 
criticised.
The other matter paragraph comes directly after the Key Audit Matters paragraph (where applicable).