Auditing and Attestation - Certified Public Accountant (CPA) Practice Exam 2026 - Free CPA Practice Questions and Study Guide

The term 'emphasis of matter' in an auditor's report signifies that there is a specific area within the financial statements that is particularly important for users to understand. This inclusion helps to highlight matters that may not be reflected as a modified opinion but still warrant attention.

Such emphasis can relate to various significant issues, such as uncertainties, significant judgments made by management, or critical risks that need to be considered when interpreting the financial statements. By distinguishing these matters, the auditor is ensuring that users are aware of their importance, which assists in making informed decisions based on the financial statements.

This understanding is crucial, as it guides users in focusing on pertinent issues that could affect their assessment of the entity’s financial health or operational effectiveness. In contrast, the other options address different aspects of an audit report that do not align with the specific function of an emphasis of matter paragraph.