PCAOB’s Auditing Standard (AS) 3101: The Auditor’s Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion provides practitioners with guidance for the determination, communication, and documentation of critical audit matters (CAMs), including the requirements for discussion in the auditor’s report. Review the section of AS 3101 focusing on critical audit matters (paragraphs 11 through 17).
Pretend that you are the audit manager on an annual financial statement audit engagement for a public company (the client).
Create a unique scenario in which you encounter a critical audit matter that must be evaluated, communicated, and reported. Explain any relevant circumstances and supporting evidence.
Describe how the matter will be communicated in the auditor’s report, including specific language that should be used.
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