December 10, 2018

CAQ Provides Lessons Learned from Dry Runs on Critical Audit Matters

Washington, DC – Robust communication and planning will be required to effectively determine and communicate critical audit matters (CAMs) in the updated auditor’s report, according to a new resource from the Center for Audit Quality (CAQ). The publication, Critical Audit Matters: Lessons Learned, Questions to Consider, and an Illustrative Example, presents early lessons learned from "dry runs" that certain CAQ member firms have conducted on CAMs.

“The updated auditor's report presents an excellent opportunity to enhance transparency and strengthen investor trust,” said CAQ Executive Director Cindy Fornelli. “Building on the public company auditing profession's proactive engagement around auditor reporting, this publication's insights will be valuable for auditors, audit committees, financial executives, investors and others ahead of important implementation deadlines for critical audit matters in 2019 and 2020."

The resource examines key takeaways from testing of CAMs to date, which include the following:

  • Determining which matters are CAMs involves applying a principles-based approach and significant auditor judgment.
  • It is important for the auditor to communicate with management and the audit committee early and often in the process of identifying and drafting CAMs.
  • Auditors, preparers, audit committees, and others should plan accordingly for the time it will take to determine and draft CAMs.
  • Drafting CAMs can be challenging.

The publication also contains an illustrative example of a CAM, along with a set of new questions to foster dialogue and understanding regarding the impact that CAMs may have throughout the audit.

To find this publication and more information on auditor reporting, visit the CAQ's resource page on the issue.

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About the CAQ
The Center for Audit Quality (CAQ) is an autonomous public policy organization dedicated to enhancing investor confidence and public trust in the global capital markets. The CAQ fosters high-quality performance by public company auditors; convenes and collaborates with other stakeholders to advance the discussion of critical issues that require action and intervention; and advocates policies and standards that promote public company auditors’ objectivity, effectiveness, and responsiveness to dynamic market conditions. Based in Washington, DC, the CAQ is affiliated with the American Institute of CPAs. For more information, visit www.thecaq.org.

Contact
Andrew T. Gillies
Director of Communications
agillies@thecaq.org
202-609-8048