In this third post of our year-end preparation series we are highlighting a planning area to incorporate in year-end now to hopefully avoid last-minute challenges next year. Critical Audit Matters, or CAMs, will be discussed by your auditors in their reports for years ended on or after June 30, 2019 for Large Accelerated Filers and for years ended after December 15, 2020 for others.
There has been significant discussion about the advantages of doing a “dry-run” of CAMs well in advance of the date the disclosure is required in audit reports. There are a number of good reasons to do this, including helping to understand if any original information could potentially be disclosed in the auditor’s report and to help assure that there are no glaring inconsistencies between Critical Accounting Estimate disclosure in MD&A and CAM disclosure in the auditor’s report.
To help companies in this process the Center for Audit Quality has issued a very helpful report titled “Critical Audit Matters: Lessons Learned, Questions to Consider, and an Illustrative Example.” Along with an interesting example of CAM disclosure, the report also includes a helpful list of questions for audit committees to consider as auditors prepare to report CAMs.
As always, your thoughts and comments are welcome!