Audit Analytics' review of S&P 1500 proxy statements filed between July 1, 2019 and March 31, 2020, for disclosure about the audit committee's role in CAMs revealed that about 6% of companies (more commonly, large-cap companies) include such disclosure - usually in the context of audit committee review of CAMs, discussion of CAMs with the independent auditor, or both. The post includes this example from Exelon's 2020 proxy:
Critical Audit Matters
In conformance with Public Company Accounting Oversight Board rules, the Committee reviewed and discussed with PwC four critical audit matters arising from the current period audit of Exelon’s financial statements. Critical audit matters (or CAMs) are defined to be any matter arising from the audit of the financial statements that was communicated or required to be communicated to the Audit Committee and that 1) relate to accounts or disclosures that are material to the financial statements and 2) involve especially challenging, subjective, or complex audit judgment. The Committee concurred with PwC’s assessment and identification of the CAMs contained in its Audit Report included within Exelon’s 2019 Annual Report on Form 10-K.
Last July, we reported that the PCAOB had released an audit committee resource on CAMs that includes staff FAQs that the PCAOB deems particularly relevant to audit committees, such as if/how the new requirement impacts the audit committee communications requirements and the audit committee's role in identifying and signing off on CAM communications, and questions audit committees may consider asking their auditors about the new requirements.
See Cooley's post and additional information & resources on our Audit Committees, Auditing & Audit Firms, and PCAOB pages. This post first appeared in the weekly Society Alert!