Definition
Emphasis of Matter
An emphasis of matter is a paragraph in the auditor's report that draws attention to a disclosed issue without modifying the audit opinion.
Unlike a qualified opinion, an emphasis of matter does not change the auditor's verdict; it simply highlights something already disclosed in the accounts that is fundamental to understanding them, such as a significant uncertainty or a going-concern doubt.
While not a qualification, an emphasis-of-matter paragraph still alerts investors to important risks. A going-concern emphasis, for instance, signals doubt about the company's ability to continue operating, which markets treat as a serious warning despite the unmodified opinion.
Related terms
- Auditor's ReportThe auditor's report is the independent auditor's formal opinion on whether a company's financial statements give a true and fair view and comply with accounting standards.
- Qualified OpinionA qualified opinion is an auditor's verdict that the financial statements are fairly presented except for a specific issue the auditor disagrees with or could not verify.
- Going ConcernGoing concern is the accounting assumption that a company will continue operating for the foreseeable future, underpinning the valuation of its assets and liabilities.
- Notes to AccountsNotes to accounts are the detailed disclosures accompanying financial statements that explain accounting policies, breakdowns and items not visible on the face of the statements.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.