# Emphasis of Matter (EOM) Paragraph – SA 706
## What is an EOM Para?
An EOM Para draws attention to a matter already presented or disclosed in the Financial Statements that is fundamental to users' understanding of the FS.
## Key Rules at a Glance
| Feature | Rule |
|---|---|
| Where is the matter? | Already in FS (presented or disclosed) |
| Purpose | Direct user attention to a fundamental matter |
| Modified/separate opinion? | No — no separate opinion on the EOM matter |
| Is it compulsory? | Not always compulsory |
| Substitute for disclosures? | No — cannot replace required disclosures |
## How it Works
1. Management has already disclosed a matter in the FS.
2. Auditor believes the matter is fundamental for users to understand the FS.
3. Auditor includes an EOM Para in the Independent Audit Report, referring to where in the FS the matter is disclosed.
4. Auditor does not give a separate or modified opinion on the EOM matter itself.
## Interaction with Modified Opinion (SA 705)
- If the auditor has already modified the opinion on a particular matter → the same matter cannot appear in EOM Para.
- However, the auditor can include other matters (different from the modified one) in EOM Para.
## Special Case – Subsequent Events (SA 560)
- Fire occurs after Balance Sheet date → entity discloses this non-adjusting event in the FS.
- Auditor may include it in EOM Para if, per his judgement, it is fundamental to user understanding.
- Compulsory Case: If a subsequent event after the date of the Audit Report requires amendment in FS → Auditor must include it in EOM Para.
## EOM Para vs. KAM – Overlap Rule
| Feature | EOM Para | KAM |
|---|---|---|
| Standard | SA 706 | SA 701 |
| Basis | Fundamental to user understanding of FS | Most significant to the audit |
| Selected from | Any matter in FS | Matters communicated to TCWG |
If a matter is important both for the audit AND for user understanding → Include in KAM; additional description may be given if needed.
## EOM Para is NOT a Substitute for:
1. Disclosures required by applicable FRF (management's duty)
2. Modified opinion as per SA 705
3. Going Concern (MURG) disclosures when material uncertainty exists and adequate disclosure is made by management