The Public Company Accounting Oversight Board recently issued for public comment a re-proposal that would significantly change and expand the content of the auditor’s report. While retaining the overall pass/fail audit opinion, the audit report would be expanded to cover a number of additional subjects including the independence of the auditor from the company, how long the firm has been serving as the company’s auditor, and perhaps of greatest significance, discussion of the “Critical Audit Matters” (CAM) encountered and addressed by the auditor in the course of the examination. The discussion of CAM is intended to cover those matters that were communicated to the audit committee and that relate to accounts or disclosures that are material to the financial statements and that involved especially challenging, subjective, or complex judgments by the auditor.
