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Emphasis of Matter (EoM) paragraph under SA 706 is used when:
AAuditor wishes to draw users' attention to a matter PRESENTED/DISCLOSED in the FS that is of such importance it is fundamental to users' understanding, without modifying the opinion
BAuditor disagrees with management
CAuditor lacks evidence
DAuditor wants to extend the audit
Answer & Solution
Correct answer: A. Auditor wishes to draw users' attention to a matter PRESENTED/DISCLOSED in the FS that is of such importance it is fundamental to users' understanding, without modifying the opinion
1. SA 706.7-8: EoM draws attention to disclosed matter; opinion not modified.
2. If matter is undisclosed and material, the opinion must be modified (SA 705).
3. Common EoM examples: pending litigation, regulatory uncertainty.
_Source: ICAI BoS CA Final Paper 3, Ch 6 "Standards on Auditing and Professional Ethics"_
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