PCAOB offers deeper dive into CAMs

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The Public Company Accounting Oversight Board has published guidance from its staff on how auditors can communicate critical audit matters in their audit reports.

As part of its AS 3101 auditing standard, the PCAOB will soon be requiring the biggest public companies to begin reporting on CAMs, in a phased rollout starting with financial statements of large accelerated filers for fiscal years ending on or after June 30, 2019.

The staff guidance document, A Deeper Dive on the Communication of CAMs, was developed to support implementation of the new CAMs requirements. It comes after discussions with auditors about their experiences doing dry runs of CAMs with their audit clients, and the PCAOB staff’s review of methodologies submitted by 10 U.S. audit firms that collectively audit approximately 85 percent of large accelerated filers, along with other outreach efforts.

CAMs are matters that arise during an audit that are either communicated or are required to be communicated to the company’s audit committee relating to accounts or disclosures seen as material to the financial statements, that involve especially challenging, subjective or complex auditor judgments.

For each matter communicated in the auditor’s report, the auditor is required to€:

  • 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.

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