For the second year, the Public Company Accounting Oversight Board (PCAOB) Investor Advisory Group (IAG) is asking the public to send in nominations for the best critical audit matters (CAMs) or key audit matters (KAMs) in audit reports included in 2024 Form 10-Ks and Form 20-Fs.
The deadline is June 30, 2025.
Domestic public company auditors disclose CAMs. KAMs apply to auditors that follow standards set by the International Auditing and Assurance Standards Board.
The request for nomination was announced by Jeffrey Mahoney, general counsel of the Council of Institutional Investors (CII) who is a member of the IAG, which had a virtual meeting on April 29.
In particular, Mahoney, who started this initiative last year with the first call for nominations during an IAG meeting in April 2024, said that the panel wants “the general public, including audit committee chairs and members, auditors, financial analysis, investors, and academics, for what they believe to be the most decision-useful” CAMs or KAMs.
The submissions can be made anonymously.
However, he said the panel wants a 500-word maximum explanation about why they believe the nominated audit matters to be the most decision-useful to investors.
CII’s Mahoney said that all eligible nominations will be reviewed and evaluated by IAG members. They will then vote for the three most useful CAMs or KAMs. And the three CAMs or KAMs that get the highest votes will be identified and discussed in an IAG report that will be issued before the end of this year.
“So, the goal of this annual initiative is to encourage independent auditors to voluntarily improve the quality of information communicated to investors in the audit reports of public companies,” Mahoney said.
His request comes as the number and quality of CAMs have been relatively low.
The average number of CAMs has been declining, according to PCAOB staff reports.
Moreover, the matters disclosed did not provide much useful insight about what the auditors really thought of the company’s financial conditions but instead providing information about what they did.
“So anyone listening to me right now, please, please consider submitting at least one nomination by the June 30 deadline,” CII’s Mahoney said.
The best CAMs last year went to Deloitte & Touche LLP for its audit of Berkshire Hathaway Inc. and Ernst & Young LLP for its audit of Moderna, Inc.
Fate of PCAOB’s CAMs Project Unclear
In the meantime, it is unclear what the PCAOB will do to make auditors provide more useful CAMs.
After putting CAMs on its research agenda in November 2023, the PCAOB did not advance the project to its standard-setting agenda.
While the board has traditionally published updates to its agendas twice a year, usually in May and November, this comes at a time when the PCAOB will likely experience dramatic transformation.
Lawmakers are considering folding the PCAOB’s work into the Securities and Exchange Commission (SEC), which today oversees the audit watchdog. Under the current legislative proposal, the SEC will not have enough resources to effectively supervise audit firms. And projects like CAMs, which auditors and companies questioned their value, will likely be dropped.
Even if Congress ultimately does not vote to eliminate the board, the new leadership at the SEC headed up by Chair Paul Atkins will likely push for change in directions at the PCAOB.
When Gary Gensler was SEC chair, the PCAOB pursued aggressive enforcement and inspections programs. Moreover, the board has also started to update decades-old standards, though the PCAOB had to abandon three major projects once Trump was elected president in November last year.
This article originally appeared in the May 6, 2025, edition of Accounting & Compliance Alert, available on Checkpoint.
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