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The process of identifying and reporting CAMs: early evidence

Author

Listed:
  • Brian E. Daugherty

    (University of WI – Milwaukee)

  • Denise Dickins

    (East Carolina University)

  • Marshall K. Pitman

    (University of Texas at San Antonio)

  • Wayne A. Tervo

    (Murray State University)

Abstract

Auditors of US issuers classified as large accelerated filers with yearends on or after June 30, 2019 are required to consider inclusion of critical audit matters (CAMs) in their audit reports. We survey the audit engagement partners, audit committee chairs, and chief financial officers of certain US issuers to gain insight into the process of identifying and reporting CAMs. We also gather perceptions about the impact of disclosing CAMs on audit effectiveness and efficiency. Our results provide initial evidence that the CAM reporting process is largely controlled by the independent auditor. They also provide mixed evidence about concerns expressed during the comment phase of the proposed auditing standard: The CAM process increases audit fees, but it does not adversely impact audit quality. Stakeholders participating in the CAM process question whether reporting CAMs adds enough, if any, value to justify its costs.

Suggested Citation

  • Brian E. Daugherty & Denise Dickins & Marshall K. Pitman & Wayne A. Tervo, 2021. "The process of identifying and reporting CAMs: early evidence," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 18(1), pages 16-23, March.
    • Handle: RePEc:pal:ijodag:v:18:y:2021:i:1:d:10.1057_s41310-020-00101-1
    DOI: 10.1057/s41310-020-00101-1
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    References listed on IDEAS

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    1. Mark S. Beasley & Joseph V. Carcello & Dana R. Hermanson & Terry L. Neal, 2009. "The Audit Committee Oversight Process," Contemporary Accounting Research, John Wiley & Sons, vol. 26(1), pages 65-122, March.
    2. Jean H. Bédard & Nathalie Gonthier-Besacier & Alain Schatt, 2019. "Consequences of Expanded Audit Reports : Evidence from the Justifications of Assessments in France," Post-Print hal-02011144, HAL.
    3. Elizabeth Gutierrez & Miguel Minutti-Meza & Kay W. Tatum & Maria Vulcheva, 2018. "Consequences of adopting an expanded auditor’s report in the United Kingdom," Review of Accounting Studies, Springer, vol. 23(4), pages 1543-1587, December.
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    Cited by:

    1. Li, Valerie & Luo, Yan, 2023. "Costs and benefits of auditors' disclosure of critical audit matters: Initial evidence from the United States," Advances in accounting, Elsevier, vol. 60(C).

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