CAQ Issues Year-in-Review Report on Critical Audit Matters

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Dec 03, 2020

On December 3, 2020, the Cen­ter for Au­dit Qual­ity (CAQ) has re­leased a new re­port “Critical Audit Matters — A Year in Review”. The publication provides observations from the CAQ’s analysis of the CAMs communicated in the auditor’s reports for companies broadly, as well as a deeper dive into the S&P 100, which comprises 100 public companies across multiple industry groups.

The new report provides data and analysis on the first year (2019) that critical audit matters (CAMs) were included in auditor reports. Consistent with the requirements of the Public Company Accounting Oversight Board (PCAOB), the CAQ report finds that CAMs for S&P 100 companies frequently focused on some of the most complex accounting issues that require a high degree of judgement by the auditor.

The report notes (i) every auditor report for S&P 100 companies contained at least one CAM; and (ii) the 100 auditor reports included a total of 198 CAMs for an average of just under two (1.98) CAMs per report; and (iii) there was a single auditor report that communicated five CAMs, while 32 auditor reports communicated only one CAM.

Four common categories of CAMs emerged in S&P 100 auditor reports: taxes (16% of CAMs), goodwill and/or intangibles (14% of CAMs), other contingent liabilities (12% of CAMs), and revenue (9% of CAMs).

For fur­ther de­tails, re­fer to the press re­lease and the Re­port on the CAQ's web­site.

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