Preparing for Critical Audit Matters: What Management and Audit Committees Need to Know

What is a CAM?

A critical audit matter (CAM) is any matter arising from the audit of the financial statements that was communicated or required to be communicated to the audit committee and that relates to accounts or disclosures that are material to the financial statements and that involves especially challenging, subjective or complex auditor judgment.

How are CAMS Assessed?

CAMs involve “especially challenging, subjective or complex auditor judgment.” In determining whether those criteria apply, the auditor should take into account, alone or in combination, the following nonexclusive factors:

  • The nature of audit evidence

  • The nature & timing of significant unusual transactions

  • The auditor’s risk assessment

  • The nature and extent of audit effort (including the extent of specialized skill or consultation)

  • The degree of auditor subjectivity

  • The degree of management & auditor judgment

To learn more about the changes and what you should expect, download the full version.