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reflect on Critical Audit Matters ( CAMs ) are issues from audits of financial statements that require communication with the audit committee and involve complex
reflect on Critical Audit Matters CAMs are issues from audits of financial statements that require communication with the audit committee and involve complex auditor judgments. Financial statements include CAMs, and SEC Release requires registrants to disclose "critical accounting estimates" in Form K The Center for Audit Quality's analysis of audit reports shows auditors provide straightforward descriptions of CAMs, but costs may be passed on to clients through increased audit fees. The PCAOB surveyed engagement partners, finding had negative views of CAMs, and of investors would use CAMs in the future.
The PCAOB and Center for Audit Quality's expected benefits of Critical Audit Matters CAM disclosure may be questioned due to the results of its analysis of subsequent stock market returns. The authors reexamined companies from an earlier survey and compared the reporting of CAMs seen in and the second and third year of implementation. The PCAOB Staff Guidance outlines the determination and communication of CAMs every year, with some matters being CAMs each year or in a single period or intermittently. In and the average number of CAMs included in audit reports was and respectively.
CAMs deleted in and included two related to goodwill calculation issues KLA Corporation and Procter & Gamble and one on a revenue recognition issue Palo Alto Networks In all continuing CAMs were worded identically, similarly, or shortened compared to Microsoft's audit reports for through included a CAM on uncertain tax positions with identical wording, and each report included a CAM on revenue recognition with identical wording.
The audit procedures for Aspen Technology, Inc. were conducted to evaluate management's estimates of uncertain tax positions related to unresolved transfer pricing issues, the determination of forecasts of future revenue and operating margin, and the selection of the weighted cost of capital used by management to estimate the fair value contributed by the nextgen platform.
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