**Orion Ltd.**, a listed entity, is involved in a significant court case. The matter:

is appropriately disclosed in Note 32 of the financial statements;
is fundamental to users’ understanding of the financial statements;
required significant auditor attention because of the uncertainty involved; and
was determined by the auditor to be **one of the matters of most significance in the audit**.

The auditor is considering whether to present the matter as an **Emphasis of Matter (EOM)** paragraph or as a **Key Audit Matter (KAM)**.

Which ONE of the following is the **most appropriate conclusion**?

**A.**

The matter should ordinarily be communicated as a KAM because it satisfies the KAM criteria; an EOM paragraph is not a substitute for communicating an individual matter that qualifies as a KAM.

**B.**

The matter should ordinarily be communicated through an EOM paragraph because its fundamental importance to users takes precedence over the KAM classification whenever the matter is adequately disclosed.

**C.**

The auditor may choose either a KAM or an EOM paragraph because both mechanisms communicate matters that are fundamental to users, provided the financial statements contain adequate disclosure of the matter.

**D.**

The matter should ordinarily be communicated through an EOM paragraph unless the auditor concludes that the litigation resulted in a modified opinion, in which case the KAM requirements would automatically become applicable.