United States

Critical audit matters: PCAOB guidance


The Public Company Accounting Oversight Board (PCAOB) recently released guidance to support the implementation of revised Auditing Standard 3101, The Auditor's Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion, which requires auditors to communicate critical audit matters (CAMs) in their reports on audits of financial statements. Implementation of Critical Audit Matters: The Basics provides a high-level overview of CAM requirements that may be of interest to financial statement preparers and audit committees. RSM’s white paper, Critical audit matters: Information for audit committees, also is a resource for audit committee members who have questions about CAMs and the process for determining and disclosing them in the auditor’s report.

In addition, the PCAOB released Implementation of Critical Audit Matters: A Deeper Dive on the Determination of CAMS, which addresses a number of questions auditors have posed to the PCAOB, including the following, among others:

  • How should the auditor apply the requirement to determine matters that involve “especially challenging, subjective or complex auditor judgment”?
  • How should significant events or matters pertaining to the company’s overall business operations or economic or regulatory environment be evaluated for purposes of determining CAMs?
  • How should a material weakness or significant deficiency in internal control over financial reporting be considered when determining CAMs?
  • What is the relationship between CAMs and a company’s disclosures regarding critical accounting estimates?
  • How should “significant risks” be considered in determining whether a matter involved especially challenging, subjective or complex auditor judgment?