In previous blog posts, we have discussed PCAOB Staff Guidance on the basics of critical audit matters (CAMs), the determination of CAMs and the methodologies for CAMs compliance. In a recent PCAOB Staff Guidance, “Implementation of Critical Audit Matters: A Deeper Dive on the Communication of CAMs,” the Staff focuses on CAM communications. There are four aspects of the CAM communications requirements: (i) identification of the CAM, (ii) principal considerations relating to the auditor’s determination that a matter constitutes a CAM, (iii) description of how the CAM is addressed and (iv) reference to financial statement accounts or disclosures relating to the CAM. The language used to communicate a CAM must provide the CAM definition, the period(s) as to which CAMs relate, and indicate that CAMs do not alter the auditor’s opinion. Auditors should not imply they are providing a separate opinion on the CAM or on the accounts or disclosures to which the CAM relates. If the auditor determines there are no CAMs, the auditor must provide the CAM definition and indicate that there are no CAMs.
In the Staff FAQs, the Staff provides detailed guidance on how an auditor should describe the considerations leading to the determination of a CAM, descriptions of audit procedures as part of the CAM communication and other CAM communication recommendations.