Views on improving the integrity of global capital markets
10 October 2019

The Matter with “Critical Audit Matters”

Posted In: Financial Reporting

Beginning in 2019, certain public companies’ audit reports will begin to contain new information — critical audit matters, commonly referred to as CAMs. A CAM is any matter arising from the audit of a company’s financial statements that meets all of the following criteria:

  • a matter that was communicated or is required to be communicated to the audit committee;
  • a matter that relates to accounts or disclosures that are material to the financial statements; and
  • a matter that involved especially challenging, subjective, or complex auditor judgment.

The Public Company Accounting Oversight Board’s (PCAOB’s) standard requiring the auditor to communicate this new information about the audit is intended to make the auditor’s report more informative and relevant to investors and other financial statement users. CAMs are intended to provide tailored information specific to the audit — from the auditor’s point of view — on matters that require especially challenging, subjective, or complex auditor judgment. 

PCAOB Investor Resourceprovides investors with information regarding changes to the auditor’s report, answers frequently asked questions about CAMs, and includes details about the implementation of the standard. It also explains the difference between CAMs and Key Audit Matters as required by the International Auditing and Assurance Standards Board.

Image Credit: ©krisanapong detraphiphat

About the Author(s)
Mohini Singh, ACA

Mohini Singh is director of financial reporting policy at CFA Institute. She represents membership interests regarding financial reporting and disclosure proposals issued by the FASB, the IASB, and others. Singh holds the Associate Chartered Accountant (ACA) designation.

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