What to expect from auditor reporting of critical audit matters has been saved
What to expect from auditor reporting of critical audit matters
On the board’s agenda–April 2019
Questions and considerations for boards in advance of the first auditor reporting of CAMs this summer.
Critical audit matters
The January 2019 edition of On the board’s agenda, "The 2019 boardroom agenda: Something old, something new?" suggested that the coming change in audit reports related to critical audit matters (CAMs) would be one of the top issues of board and audit committee focus this year. Audit reports for large accelerated filers will include a new section addressing CAMs beginning for audits of fiscal years ending on or after June 30, 2019, and for other public companies in 2020. This will be a dramatic change in auditor reporting and is expected to generate significant media attention, particularly in the first year of adoption. What is the board’s role with respect to CAMs? How are CAMs identified? What is being done to prepare for CAMs and what might boards expect? This edition discusses these questions and highlights considerations for boards in advance of the first auditor reporting of CAMs this summer.
What is the role of the board with respect to CAMs?
While oversight of financial reporting is delegated to the audit committee, boards should remain engaged and understand which areas may be identified as CAMs; this can be achieved through regular communications with the audit committee, auditor, and management. Audit committees, in exercising their oversight role, should engage with the auditor throughout the audit—during planning, interim periods, and at year-end—to understand the CAMs and any issues that may arise that may change the ultimate conclusion regarding CAMs. In addition, the board should understand how management and investor relations are preparing for the implementation of CAMs. We have highlighted some questions boards can consider in preparation for the implementation of CAMs.