Question
The PCAOB has proposed changes to the auditor's report for public companies that include requirements for the auditor to communicate critical audit matters. Critical audit
The PCAOB has proposed changes to the auditor's report for public companies that include requirements for the auditor to communicate "critical audit matters." Critical audit matters include those matters during the audit that involved difficult, subjective, or complex auditor judgments or that posed difficulty to the auditor in obtaining sufficient appropriate evidence or in forming the opinion on the financial statements. Similarly, the International Auditing and Assurance Standards Board (IAASB) recently revised the auditor's report in the International Standards on Auditing (ISAs) to require auditors to communicate "key audit matters." Key audit matters include communication of similar kinds of information as proposed by the PCAOB such as areas of higher assessed risk of material misstatement and the effects of significant events or transactions that occurred during the period.
Describe how users of the financial statements may benefit from communications about these matters in an audit report.
Users may find the disclosures by the auditor about critical audit matters helpful in understanding (select from the following: some of the challenges and issues that arouse during the audit, some of the standard procedures that are followed during the audit, the scope of the auditor's work and opinion on internal control over financial reporting, what the auditors spent most of their time focused on during the audit). Matters that would be disclosed provide users insights about the (select from the following: most difficult, subjective, or complex auditor judgements or issues that posed most difficulty to, or Most difficult, subjective, or complex auditor judgements or issues that prevented) the auditor in obtaining sufficient appropriate evidence for forming an opinion
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