The AICPA has issued technical guidance on emphasis paragraphs in the auditor’s reports and on independence impairment in compilation reports.
Technical Inquiry and Reply (TPA) 9160.28 regards combining going-concern emphasis with another emphasis-of-matter paragraph. This TPA explains that although AU Section 508, Reports on Audited Financial Statements (AICPA, Professional Standards), does not preclude an auditor from combining matters either required to be emphasized, or added at the auditor’s discretion, in the auditor’s report, it may be prudent for the auditor to emphasize each matter separately in separate paragraphs.
Whether the auditor decides to combine more than one matter in the same paragraph is a matter of professional judgment.
Technical Inquiry and Reply (TPA) 9150.30 regards disclosure of independence impairment in the accountant’s compilation report on comparative financial statements.
This guidance explains that an accountant may modify the accountant’s compilation report on comparative financial statements for an entity with respect to which the accountant was not independent as of and for the earlier period ended, but such impairment was subsequently cured, by including language as the final paragraph of the accountant’s compilation report.
The accountant is not precluded from describing why the accountant’s independence is impaired and how the impairment was subsequently cured. The TPA provides sample disclosure language.
—Ken Tysiac (email@example.com) is a JofA senior editor.