CAF-8 · Chapter 14 · Question 6 of 10
A client faces a massive, highly publicized lawsuit that threatens its survival. Management has perfectly disclosed this contingent liability in Note 15. The auditor agrees with the disclosure. How should the auditor highlight this to the users?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Add an Emphasis of Matter paragraph drawing attention to Note 15, stating the opinion is not modified in respect of this matter.
Explanation
An Emphasis of Matter (EOM) paragraph is used to draw users' attention to a matter that is already appropriately presented or disclosed in the financial statements, which is of such fundamental importance that users must understand it. It does not modify the clean opinion.
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