Every 2-3 months this year, the PCAOB has been publishing resources to explain the “critical audit matters” disclosure that’ll appear in upcoming audit reports. The latest two pieces came out last week – one is directed to investors and the other is directed to audit committees – in addition, the CAQ also published a primer on CAMs for investor relations teams.
Here are a couple responses to “frequently asked questions” that the PCAOB has gotten from audit committees about CAMs (also see pg. 6 for a list of questions that audit committees should ask auditors):
1. Will the new requirement of the auditor to communicate CAMs change required audit committee communications?
Other than a new requirement for the auditor to provide and discuss with the audit committee a draft of the auditor’s report, the PCAOB’s requirements for audit committeecommunications remain the same. Any matter that will be communicated as a CAM should have already been discussed with the audit committee and, therefore, the information should not be new.
2. Does the audit committee have a role in determining and ap-proving CAM communications?
No. While the auditor is required to share the draft auditor’s report including any CAMs identified with the audit committee, CAMs are the sole responsibility of the auditor. The standard is designed to elicit more information about the audit directly from the auditor. As the auditor determines how best to comply with the communication requirements, the auditor could discuss with management and the audit committee the treatment of any sensitive information.
-Liz Dunshee, TheCorporateCounsel.net July 15, 2019
