You are the partner responsible for the audit of Grimes Co, for the year ended 30 April 2010. The final audit has been completed and you have asked the audit manager to draft the audit report. The manager is aware that there is guidance for auditors relating to audit reports in ISA 706 Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor’s Report. The manager has asked for your assistance in this matter.

Required:

(i) Define an ‘Emphasis of Matter paragraph’ and explain, providing examples, the use of such a 
paragraph; (6 marks)

(ii) Define an ‘Other Matter paragraph’ and explain, providing examples, the use of such a paragraph.

Note: You are not required to produce draft paragraphs. (4 marks)