what is isa 706?
ISA 706, titled "Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor's Report," is an International Standard on Auditing issued by the International Auditing and Assurance Standards Board (IAASB). It provides guidance on how auditors should communicate certain matters in their audit reports.
The standard outlines the circumstances under which an auditor may include an Emphasis of Matter paragraph or an Other Matter paragraph in their report.
Emphasis of Matter Paragraph: This is used to draw attention to a matter that is disclosed in the financial statements and is of such importance that it is fundamental to users' understanding of the financial statements. This could include significant uncertainties, going concern issues, or significant accounting policies.
Other Matter Paragraph: This is used to communicate matters other than those that are presented or disclosed in the financial statements that, in the auditor's professional judgment, are relevant to users' understanding of the audit, the auditor's responsibilities, or the audit report.
The inclusion of these paragraphs does not modify the auditor's opinion but serves to highlight important information that users should consider when reading the financial statements.
ISA 706 is part of a broader framework of auditing standards that aim to enhance the quality and consistency of audits globally.