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CAMs in new audit report would protect auditors, study says

Tammy Whitehouse | September 8, 2016

If auditors are required to begin explaining critical audit matters as proposed by regulators, the disclosures will shake credibility in those areas of financial statements and may even serve as disclaimers to insulate auditors, according to the latest academic research.

CAM disclosures by audit firms might even help auditors chip away at the “expectations gap” that has long dogged the profession. That’s the notion that investors generally expect the audit to provide a higher level of assurance about the soundness of financial statements than it actually does.

The research out of the University of Texas sought to predict the effect of the proposed new CAM requirement being contemplated by the Public Company Accounting Oversight Board. The PCAOB issued a revised...

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