ISA 706 deals with two types of additional communication In the auditor’s report.
(a) Emphasis of matter paragraph
(b) Other matters paragraph
2. EMPHASIS OF MATTER
Emphasis of a matter paragraph is necessary under following circumstances:
(a) Significant uncertainly relating to litigation
(b) Early application of a new accounting standard
c) A major catastrophe which may have a significant effect on entity’s financial position.
Emphasis of a matter paragraph is included in audit opinion only when the management has fully disclosed the relevant facts in the notes to the accounts. .
3. OTHER MATTERS PARAGRAPH
Examples of other matter paragraph in audit opinion are: a) Where the inability to obtain sufficient and appropriate evidences is so material due to rest restrictions imposed by the management is no material and pervasive that the auditor considers that a withdrawal from engagement is necessary, but unable to do so, there auditor may include an other matters paragraph. The paragraph should explain why it is not possible for the auditor to withdrawal from engagement.
(b) Responsibilities of auditor in addition to those set out in ISAs.
(c) Where an entity has prepared two set of financial statements, for example one in compliance with local regulations and another in accordance with IFRS, if the auditor’s opinion is required on both set of financial statements, the auditor may include an other matter paragraph in the audit report. The paragraph will state that another set of financial statements has been prepared in accordance with another general purpose framework and that the auditor has issued a report on these financial statements.
(d) Restriction on distribution of audit report.