The process of identifying and reporting CAMs: early evidence

Brian E. Daugherty (), Denise Dickins (), Marshall K. Pitman () and Wayne A. Tervo ()
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Brian E. Daugherty: University of WI – Milwaukee
Denise Dickins: East Carolina University
Marshall K. Pitman: University of Texas at San Antonio
Wayne A. Tervo: Murray State University

International Journal of Disclosure and Governance, 2021, vol. 18, issue 1, No 2, 16-23

Abstract: Abstract Auditors of US issuers classified as large accelerated filers with yearends on or after June 30, 2019 are required to consider inclusion of critical audit matters (CAMs) in their audit reports. We survey the audit engagement partners, audit committee chairs, and chief financial officers of certain US issuers to gain insight into the process of identifying and reporting CAMs. We also gather perceptions about the impact of disclosing CAMs on audit effectiveness and efficiency. Our results provide initial evidence that the CAM reporting process is largely controlled by the independent auditor. They also provide mixed evidence about concerns expressed during the comment phase of the proposed auditing standard: The CAM process increases audit fees, but it does not adversely impact audit quality. Stakeholders participating in the CAM process question whether reporting CAMs adds enough, if any, value to justify its costs.

Keywords: Auditor’s report; Critical audit matters (CAMs); Key audit matters (KAMs) (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1057/s41310-020-00101-1

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