Are Critical Audit Matters Useful to Investors? The Group Lease Example
Copyright © The Authors. All rights reserved.
Description
Critical Audit Matters (CAMs) are a part of the new auditor’s report required by the PCAOB under Auditing Standard (AS) 3101: The Auditor’s Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion. AS 3101 was issued in 2017 and becomes effective for certain public companies in 2019. Under AS 3101, CAMs are any matter arising from the audit of the financial statements that was communicated to the audit committee, and that are of material significance and involve subjective or complex auditor judgment. CAMs are expected to improve transparency to investors and those charged with governance. This teaching case follows Walter Khonha, who is an accounting graduate working as a financial analyst for an international investment company in the US. He has questions about CAMs including: What are CAMs? What information is contained in CAMs? Will CAMs benefit investors in making investment decisions? To answer these questions, Walter researches a similar concept called Key Audit Matters (KAMs).that has been implemented in the international community, and Thailand in particular. This teaching case walks students through the history of the Thai auditor’s report, the introduction of KAMs, and an example involving Group Lease Public Company Limited where KAMs revealed a significant fraudulent accounting practice.
Are Critical Audit Matters Useful to Investors? The Group Lease Example
Marshall University
Critical Audit Matters (CAMs) are a part of the new auditor’s report required by the PCAOB under Auditing Standard (AS) 3101: The Auditor’s Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion. AS 3101 was issued in 2017 and becomes effective for certain public companies in 2019. Under AS 3101, CAMs are any matter arising from the audit of the financial statements that was communicated to the audit committee, and that are of material significance and involve subjective or complex auditor judgment. CAMs are expected to improve transparency to investors and those charged with governance. This teaching case follows Walter Khonha, who is an accounting graduate working as a financial analyst for an international investment company in the US. He has questions about CAMs including: What are CAMs? What information is contained in CAMs? Will CAMs benefit investors in making investment decisions? To answer these questions, Walter researches a similar concept called Key Audit Matters (KAMs).that has been implemented in the international community, and Thailand in particular. This teaching case walks students through the history of the Thai auditor’s report, the introduction of KAMs, and an example involving Group Lease Public Company Limited where KAMs revealed a significant fraudulent accounting practice.
