Take the Survey: Critical Audit Matters
Beginning in 2019, some public companies began to include a discussion of critical audit matters, commonly referred to as CAMs, in their audit reports. A CAM is defined as any matter arising from the audit of the financial statements that was communicated or required to be communicated to the audit committee and that
- relates to accounts or disclosures that are material to the financial statements; and
- is involved especially challenging, subjective, or complex auditor judgment.
When communicating CAMs in the auditor’s report, the auditor is required to include introductory language in the “Critical Audit Matters” section of the auditor’s report. For each CAM communicated in the auditor’s report, the auditor must
- identify the CAM;
- describe the principal considerations that led the auditor to determine that the matter is a CAM;
- describe how the CAM was addressed in the audit; and
- refer to the relevant financial statement accounts or disclosures that relate to the CAM.
The Public Company Accounting Oversight Board (PCAOB) now requires the auditor to communicate this new information about the audit. The PCAOB standard is intended to make the auditor’s report more informative and relevant to investors and other financial statement users.
The PCAOB wants to fully understand the impact of the CAM requirements on audit firms, preparers, audit committees, investors, and other financial statement users. As part of that commitment, the staff of the PCAOB’s Office of Economic and Risk Analysis is conducting an interim analysis to assess the phased implementation of these CAM requirements.
The PCAOB would like to hear from investors and is conducting an investor-specific survey in addition to their general request for comment. We urge you to provide feedback by completing the PCAOB survey. The deadline to complete the survey is May 29th.
Image Credit: © Getty Images/ Nora Carol Photography