[CirocOnTheRock]

question

Can someone explain why the answer is D and not C?

BEC

REG

AUD

[DoubleBogey]

Other matter paragraphs involve issues to clarify liability under the audit and auditor. It isn't the same thing as an emphasis of matter paragraph. So, D is the BEST answer.

[Joetse]

Under this situation, just a plain-old uncertainty/contingency, you'd only add an emphasis of matter paragraph if the litigation was SO UNUSUALLY important (so material) that not adding a paragraph to draw users attention to refer to the footnote might make them overlook the importance of the footnote or mislead users in the F/S. It would so state in the question – “The litigation was an unusually important matter to the client” so much so that losing could make them go out of business. Other matter paragraphs are only used when there is no disclosure in the F/S, and they just wanna speak on other matters. Emphasis of matters are always already disclosed in the F/S, and both emphasis of matters and other matters don't change the type of opinion, and both are just to draw users' attention. Whenever there is a modification of opinion, there always has to be an explanation paragraph of some sort to describe and quantify the departure from GAAP or scope limitation departure from GAAS.

[Author]

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