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Au 706 Summary

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Submitted By Stacey23
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Executive Summary:
In Section 706 of the American Institute of Certified Public Accountants Professional Auditing Standards, Emphasis-of-Matter Paragraphs and Other-Matter Paragraphs in the Independent Auditor’s Report are discussed. This Standard comes from SAS No 122 and is effective for audits of financial statements ending on or before December 15, 2012.
The scope of this section is to address additional communications in the auditor’s report when the auditor considers it necessary to draw the user’s attention to a matter that is:
• Presented or disclosed in the financial statements that are of such importance that they are fundamental to user’s understanding of the financial statements (emphasis-of-matter paragraph), or
• Other than those presented or disclosed in the financial statements that are relevant to the user’s understanding of the audit, the auditor’s responsibilities, or the auditor’s report (other-matter paragraph).
Section 706 contains exhibits that include AU sections that contain requirements for the auditor to include in the emphasis-of-matter paragraph and the other-matter paragraph and also the auditor’s report.
The objective, after the auditor has formed their opinion on the financial statements, is to draw the user’s attention, when in the auditor’s judgment it is necessary to do so, within the auditor’s report, to:
• A matter, presented or disclosed in the financial statements, that is fundamental to the users’ of the financial statements, or
• Any other matter that is relevant to the users’ understanding of the audit, the auditor’s responsibilities, or the auditor’s report.
For AU 706, the following terms are defined:
• Emphasis-of-matter paragraph, and
• Other-Matter paragraph.

The requirements for the emphasis-of-matter paragraph in the Auditor’s report are designed to draw the user’s attention to a matter

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