Investors Asked to Gauge New, Extended Audit Reports

The U.S. auditor regulator wants to hear how investors are using a new, extended audit report that started appearing in annual financial statements last summer.

• The Public Company Accounting Oversight Board is pushing ahead with its planned review of the new communication between auditors and investors despite the market turmoil brought on by the coronavirus pandemic. Known as critical audit matters (or CAMs), the extended reports detail the most complex and subjective audit areas and steps taken to address them.
• Investors are being asked how many of the new reports they read and why. The board also wants to know whether the CAMs altered their interaction with management or investment decisions.
• The board is asking preparers whether they had to change any disclosures or internal controls, and what costs they incurred to adapt to the new report. They also want to hear whether audit committees focused more attention on areas highlighted by auditors.
• The PCAOB aims to complete its review before the requirements take affect for another wave of companies in December. Comments are due June 15, giving stakeholders twice the standard time to respond amid the outbreak.