October 2008 Basis for Conclusions:
ISA 706 (Revid and Redrafted), “Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor’s Report”
Prepared by the Staff of the International Auditing and Assurance Standards Board
BASIS FOR CONCLUSIONS:
ISA 706 (REVISED AND REDRAFTED), EMPHASIS OF MATTER PARAGRAPHS AND OTHER MATTER PARAGRAPHS IN THE INDEPENDENT AUDITOR’S
REPORT
This Basis for Conclusions has been prepared by staff of the International Auditing and Assurance Standards Board (IAASB). It relates to, but does not form part of, ISA 706 (Revid and Redrafted), “Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor’s Report,” which was approved by the IAASB in June 2008.1 Background
1.In March 2005, the IAASB issued an exposure draft of propod ISA 706 (Revid). The
comment period for the propod ISA clod on July 31, 2005. The IAASB gave due consideration to the comments received and approved the “clo off” document of ISA 706 (Revid) in the “old style” (i.e., following the extant ISA’s drafting conventions for ISAs) in July 2006.2 The IAASB’s Clarity conventions were applied to tho documents.
An exposure draft of propod ISA 706 (Revid and Redrafted) (ED-ISA 706) was published in July 2007.
2.The Clarity conventions ud by the IAASB in redrafting its ISAs, and the authority and
obligation attaching to tho conventions, are established in ISA 200 (Revid and Redrafted), “Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with International Standards on Auditing.”3
六字开头成语
3.The comment date for the exposure draft was November 30, 2007. The IAASB received
forty-six comment letters from a variety of respondents, includinIFAC member bodies, national standard tters, firms, regulators, government organizations, and others.
Comments were also discusd with the IAASB Consultative Advisory Group (CAG).
The IAASB revid the propod ISA as a result of the comments. The following summarizes the more significant issues raid by respondents, and how the IAASB addresd them.
Objective
4.ED-ISA 706 contained the following objective:
The objective of the auditor is to include clear additional communication in
the auditor’s report when, in the auditor’s judgment, such communication is
appropriate to draw urs’ attention to a matter prented or disclod in the
1See minutes of the June 16-20, 2008 IAASB meeting at www.ifac/IAASB/Meeting-FileDL.
php?FID=4272.
2The Basis for Conclusions: ISA 705 (Revid) and ISA 706 (Revid) and related clo off documents are available on the IAASB website at www.ifac/Guidance/EXD-Details.php?EDID=0062.
3ISA 200 (Revid and Redrafted), which was approved by the IAASB in June 2008 for submission to the Public Interest Oversight Board for its confirmation of due process, contains the final statement of the authority and obligation attaching to the Clarity conventions.
financial statements or to any other matter which may be relevant to their
understanding of the financial statements or the audit.
5.Half of the respondents who expressly commented on the objective supported the
objective as drafted in ED-ISA 706. Two respondents, while supporting the objective, believed it was important to include reference to the fact that the inclusion of an Emphasis of Matter (EOM) paragraph or an Other Matter paragraph does not affect the auditor’s opinion.
6.Many who did not support the objective believed that it was encouraging too many
additional communications since it framed such communications in terms of tho that the auditor considered “appropriate.” The respondents recommended that the word “appropriate” be replaced with “necessary.” Others believed the concept of communicating other matters that are “fundamental to urs’ understanding” should be incorporated into the objective. A few felt the objective should include the notion that, in some circumstances, the auditor is required to include an EOM paragraph. A few recommended “information” be ud rather than “communication,” as the auditor’s report as a whole constitutes a means of communication.
炸牛排7.In light of respondents’ comments, the IAASB agreed to revi the objective to bring in
the following concepts:
•The auditor has formed an opinion on the financial statements, before considering whether additional communication is necessary.
•The additional communication is included when in the auditor’s judgment it is necessary to do so.
•An EOM paragraph is only to be included when the information is fundamental to the urs’ understanding of the financial statements.
•An Other Matter paragraph includes the communication as appropriate of matters other than tho prented or disclod in the financial statements that are relevant
to the ur’s understanding of the audit, the auditor’s responsibilities, or the
auditor’s report. (See discussion on relevance to the auditor’s report in paragraph
21 below).
8.The objective was also parated into bullets to address concerns over the length and
complexity of the objective in ED-ISA 706.
Respons to Requests for Specific Comments—New Requirement to Include an Emphasis of Matter Paragraph
9.The explanatory memorandum that accompanied ED-ISA 7064 requested respondents to
comment on the inclusion of a new requirement in paragraph 7 of ED-ISA 706 that provides for the auditor to u an EOM paragraph only if the auditor has obtained
篮球王子4The explanatory memorandum formed part of the exposure draft of propod ISA 706 (Revid and Redrafted), which can be found at www.ifac/Guidance/EXD-Details.php?EDID=0092.
sufficient appropriate audit evidence that the matter is not materially misstated in the financial statements. It also requires that an EOM paragraph only refer to information prented or disclod in the financial statements.
10.While respondents generally supported the proposal, similar to concerns expresd with
respect to the objective, one respondent believed that this requirement did not t preci boundaries around the u of EOM paragraphs and may impo an additional reporting responsibility on the auditor that exceeds the objective of expressing an opinion on the financial statements. Some also believed that the requirement should acknowledge that in certain specified circumstances (i.e., by virtue of requirements in other ISAs) the auditor is required to include an EOM (this is also the ca for Other Matter paragraphs).
11.Bad on the respondents’ support, the IAASB agreed that the new requirement should be
retained. The requirement was, however, strengthened to require the auditor to include an EOM para
graph when the auditor determines it is necessary. Further, a new paragraph (paragraph 2) was added in the final ISA to highlight that other ISAs require the auditor to include an EOM paragraph or Other Matter paragraph and, in tho cas, the requirements in ISA 706 (Revid and Redrafted) regarding the form and placement of tho paragraphs apply.
12.The other ISAs which require the auditor to include an EOM paragraph have been listed
in Appendix 1 of the final ISA.
Definitions
13. A few respondents were concerned with the level of detail in the Scope ction of this
ISA. The respondents suggested the IAASB include definitions of EOM paragraphs and Other Matter paragraphs in the ISA, using the material in paragraphs 3-4 of ED-ISA 706. The IAASB agreed with this suggestion and has included definitions in the revid ISA.
Requirements
14.The majority of respondents were of the view that the criteria identified by the IAASB
蒜苗炒牛肉的做法
for determining whether a requirement should be specified have been applied appropriately and consistently, such that the resulting requirements promote consistency in performance and reporting, and the u of professional judgment by auditors.
15.Although some respondents commented on the appropriateness of some of the
requirements or suggested refinement, no single requirement received a significant number of comments. Comments that resulted in changes to ED-ISA 706 and matters for the IAASB’s possible future consideration are discusd below.
Other Matter in the Auditor’s Report
16.Some respondents believed that the requirement for the auditor to include an Other
Matter Paragraph should mirror the two requirements included in the ISA relating to Emphasis of Matter paragraphs. Due to the differences between an Emphasis of Matter paragraph and an Other Matter paragraph, the IAASB disagreed. However, as noted in
paragraph 11 above, the Scope ction of this ISA was modified to highlight that the auditor is required to include an Other Matter paragraph in certain specified circumstances. The other ISAs wh
ich require the auditor to include an Other Matter paragraph have been listed in Appendix 2 of the final ISA.
17.Paragraph 34 of ED-ISA 7005 explained that law or regulation may require the auditor, or
the auditor may consider it appropriate, to elaborate on matters that provide further explanation of the auditor’s responsibilities in the audit of the financial statements or of the auditor’s report thereon. It required the auditor to address such matters under the heading Other Matters in the auditor’s report.
18.Respondents to ED-ISA 700 held diver views on this paragraph, and a number of
respondents to ED-ISA 706 also believed that the distinction between the requirement in ED-ISA 700 and the material included in ED-ISA 706 needed to be clarified. To avoid confusion, it was suggested that Other Matters be dealt with only in one ISA.
Accordingly, it was recommended that such matters be addresd only in ISA 706 (Revid and Redrafted) and that the reference to other matters in ED-ISA 700 be deleted.
19.The IAASB agreed that the requirement to include an Other Matter paragraph in the
煮牛奶的正确方法auditor’s report in prescribed circumstances, including its prentation and position, should be dealt with solely in ISA 706 (Revid and Redrafted). The material in paragraph 34 of ED-ISA 700 has been subsumed into the requirement in paragraph 8 of ISA 706 (Revid and Redrafted) and was not carried forward to propod ISA 700 (Redrafted).6
20.In respon to comments received on ED-ISA 700, the IAASB developed two new
paragraphs, providing guidance on additional circumstances in which an Other Matter paragraph may be necessary. They are prented as paragraphs A8 and A9 of ISA 706 (Revid and Redrafted). The paragraphs are:
(a)Restriction on Distribution or U of the Auditor’s Report. New paragraph A9 of
ISA 706 (Revid and Redrafted) explains that financial statements prepared for a
specific purpo may be prepared in accordance with a general purpo framework
becau the intended urs have determined that such general purpo financial
statements meet their financial information needs. Since the auditor’s report is
intended for specific urs, the auditor may determine it necessary in the
circumstances to include an Other Matter paragraph, stating that the auditor’s report
快速发面方法
is intended solely for the intended urs, and should not be distributed to or ud by
other parties.
(b)Reporting on More than One Set of Financial Statements. New paragraph A8 of
ISA 706 (Revid and Redrafted) explains that an entity may prepare one t of
financial statements in accordance with a general purpo framework (e.g., the 5Exposure Draft of ISA 700 (Redrafted), “The Independent Auditor’s Report on a Complete Set of General
Purpo Financial Statements,” issued in
6Propod ISA 700 (Redrafted), “Forming an Opinion and Reporting on Financial Statements.”
national framework) and another t of financial statements in accordance with
another general purpo framework (e.g., International Financial Reporting形容雾
Standards), and engage the auditor to report on both ts of financial statements. If
the auditor has determined that the frameworks are acceptable in the respective
circumstances, the auditor may include an Other Matter paragraph in the auditor’s酥饼的做法
report, referring to the fact that another t of financial statements has been
prepared by the same entity in accordance with another general purpo framework
and that the auditor has issued a report on tho financial statements.
21.The IAASB recognized that the matters addresd in the two new paragraphs are
intended to enhance urs’ understanding of the auditor’s report as oppod to the audit.
Accordingly, the IAASB determined it was necessary to expand the definition of an Other Matter paragraph to “a paragraph included in the auditor’s report that refers to a matter other than tho prented or disclod in the financial statements that, in the auditor’s judgment, is relevant to urs’ understanding of the audit, the auditor’s responsibilities, or the auditor’s report.” Changes to include this phra were also made throughout the requirements.
