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Financial Reporting and Regulatory Update

Second Quarter 2019

From the PCAOB

Guidance for CAM implementation

The PCAOB, on May 22, 2019, released “Implementation of Critical Audit Matters: A Deeper Dive on the Communication of CAMs” to answer frequently asked questions about how to communicate CAMs. This guidance was developed based on discussions with auditors about their experiences conducting dry runs of CAMs with their audit clients, the staff’s review of methodologies submitted by 10 U.S. audit firms that collectively audit approximately 85% of large accelerated filers, and other outreach efforts.

The guidance supplements previously released “Implementation of Critical Audit Matters,” documents that address following:

CAM webinars

The PCAOB has posted a recording of a webinar on implementation of new CAM requirements. Topics covered include CAM determination, communication, and documentation requirements as well as other considerations relevant to CAM requirements. The recording appears on the PCAOB’s new auditor’s report implementation page, alongside other resources and recently released staff guidance.

2018 Annual Report

The PCAOB released its 2018 Annual Report summarizing its operations and financial results and covering its key strategic initiatives. During 2018, the PCAOB followed a collaborative strategic planning process and performed a comprehensive organizational assessment that resulted in initiatives across  all of its programs and activities.

The report highlights areas in which the PCAOB progressed in its four strategic priorities that were identified for 2018 through 2022: effective oversight, innovation, improved engagement, and process and culture optimization. To address oversight, the PCAOB focused on improvement to inspections, standard-setting activities, enforcement, economic and risk analyses, and international engagement during 2018.

Additionally, the report addresses the PCAOB’s work in its standard-setting and research projects, highlighting standards approved in 2018 and identifying data and technology and quality control as priorities for 2019. The PCAOB also plans to examine all other items on the standard-setting and research agendas to determine items to advance, items to remove, and whether to add any new items.