Goods Pty Ltd's financial report shows a profit increase of 20% on the previous year.The chairman's report in Goods Pty Ltd's annual report boasts of a 50% increase in profit from the previous year.The auditor's report should include:

Question

Quizplus · Accepted Answer

An emphasis of matter section is appropriate when the auditor wishes to draw attention to a matter that is appropriately presented or disclosed in the financial statements but does not affect the auditor's opinion on the overall financial statements. In this case, the discrepancy between the financial report and the chairman's report could be significant for users of the financial statements, and highlighting this in an emphasis of matter section would be appropriate to ensure users are aware of the discrepancy without suggesting that the financial statements themselves are incorrect.

Goods Pty Ltd's Financial Report Shows a Profit Increase of 20