ACCA Audit and Assurance (F8) Practice Exam

What is an emphasis of matter in an audit report?

1. A section stating that the financial statements do not comply with the framework

2. A note highlighting matters critical to understanding the financial statements that are already disclosed

3. A statement that no opinion is expressed on the financial statements

4. A list of all financial statement errors

The correct answer is: A note highlighting matters critical to understanding the financial statements that are already disclosed

An emphasis of matter in an audit report serves to draw attention to certain disclosures in the financial statements that are critical for users to understand. This section does not alter the auditor’s opinion but highlights matters that have been adequately disclosed by management in the financial statements. An emphasis of matter is typically used for issues that are important but do not warrant a modification of the auditor's overall opinion, such as significant uncertainties, going concern issues, or significant transactions that may affect users’ interpretations. By calling attention to these matters, the emphasis of matter ensures that stakeholders are aware of particular points that could impact their understanding of the financial statements. This allows users to make more well-informed decisions based on the complete context provided by management’s disclosures. The other choices do not accurately describe the concept of an emphasis of matter in an audit report. Statements that indicate non-compliance with financial reporting frameworks, a lack of opinion on financial statements, or listing financial statement errors do not align with the purpose nor the definition of emphasizing critical disclosures within the scope of an audit report. Instead, they address different issues that might arise during an audit.