Emphasis of a Matter (continued)

Items that might be emphasized in an explanatory paragraph may include

Justifiable departure from GAAP
Justifiable lack of consistency
Division of responsibility with another auditor
Change in opinion regarding prior period's statements on comparative financial state-
ments
·1 Omission of supplementary information required by the FASB or the GASB or
quarterly
financial information required by the SEC
·2 Material inconsistency between unaudited information in the document with the
financial
statements & information in the financial statements
·3 Unusual or significant transaction requiring
emphasis
Emphasis of an uncertainty (at auditor's discretion)
·4 Uncertainty raising going concern doubts

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Emphasis of an Uncertainty (at Auditor's Discretion)

1) Auditor has corroborated management assertions regarding the uncertainty
Management has assessed likelihood of loss
·5 Management has reasonably estimated the amount of loss, if
possible
Management has properly accrued or disclosed the uncertainty
Likelihood of loss Amount of loss estimable Amount of loss not estimable

Probable Accrue & disclose Disclose only

Reasonably possible Disclose only Disclose only
Remote Neither accrue nor disclose Neither accrue nor disclose
2) Auditor expresses unqualified opinion
3) Auditor modifies report by adding paragraph emphasizing uncertainty after opinion para-
graph
4) Management may not properly accrue or disclose uncertainty
·6 Represents departure
from GAAP
Requires modification of opinion

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