In an audit of an issuer, which of the following is a 'Critical Audit Matter' (CAM) that must be communicated in the auditor's report?

Answer options:

Any significant deficiency in internal control.

A matter that was communicated to the audit committee, relates to accounts or disclosures that are material, and involved especially challenging, subjective, or complex auditor judgment.

All disagreements with management, regardless of materiality.

The auditor's assessment of fraud risk.

How to approach this question

CAM Definition: 1. Communicated to Audit Committee. 2. Material Account/Disclosure. 3. Complex/Subjective Judgment.

Full Answer

B.A matter that was communicated to the audit committee, relates to accounts or disclosures that are material, and involved especially challenging, subjective, or complex auditor judgment.✓ Correct

PCAOB AS 3101 defines CAMs as matters arising from the audit that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex auditor judgment.

Common mistakes

Confusing CAMs with Emphasis of Matter paragraphs.

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