Auditors soon will be able to provide more helpful information in their audit reports by communicating “critical audit matters” in addition to the pass/fail opinion on the financial statements.
Critical audit matters are the backbone of PCAOB Auditing Standard 3101, The Auditor’s Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion. Under the new standard, a critical audit matter that arises from the financial statement audit, is required to be communicated to the audit committee, and:
- Relates to accounts or disclosures that are material to the financial statements, and
- Involved especially challenging, subjective, or complex auditor judgment.
Critical audit matters are required to be included in auditors’ reports for large, accelerated…
