Highlight inclusion of Emphasis of Matter (EOM) in an audit report.

Emphasis of Matter (EOM) is included in the audit report to seek the attention of the reader, to make the reader aware about the specific instances which are not in the general course of business. Such matters can have the positive as well as negative impact on the affairs of the company in future. The purpose of an EOM paragraph is to draw the users' attention to a matter already disclosed but the auditor believes that, it is fundamental to their understanding and should be a part of the report. The following are examples of the matters which should be considered as emphasis of matter: An uncertainty relating to the future outcome of exceptional litigation or regulatory action. When there is uncertainty about exceptional future events, pending litigations. Early adoption of new accounting standards. Adoption of new technology. Recent changes in the regulatory environment. When a major catastrophe has had a major effect on the financial position. Ideally, such matters should be the part of the Directors' Report or the Management Discussion and Analysis report prepared by the company. If the same is not disclosed by the company in the Directors' report or in Management Discussion and Analysis Report, the auditor may opt to place the same in the Auditor's Report.