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SEC Approves PCAOB Standard

By Stephen Barlas
November 1, 2017
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The Securities & Exchange Commission (SEC) approved the Public Company Accounting Oversight Board’s (PCAOB) standard on the auditor’s report, which included disclosure requirements for critical audit matters (CAMs).

 

SEC Chairman Jay Clayton supports the new rule, noting, “CAMs are designed to provide investors and other financial statement users with the auditor’s perspective on matters discussed with the audit committee that relate to material accounts or disclosures and involved especially challenging, subjective, or complex auditor judgment. Investors will benefit from understanding more about how auditors view these matters.”

 

Opponents to the proposed standard had expressed concerns it would lead to auditors’ disclosing “immaterial” and confidential information. In a comment letter urging the SEC to reject the standard, 28 major corporations and businesses, including groups such as the U.S. Chamber of Commerce and companies like Nike, UPS, UnitedHealth, and Chevron, argued that it “will make audited financial statements a less effective means of disclosure, making the investment decision making process less efficient and leading to significant negative consequences for public companies.”

 

Stephen Barlas has covered Washington, D.C., for trade and professional magazines since 1981 and since 1984 for Strategic Finance and its predecessor Management Accounting. You can reach him at sbarlas@verizon.net.
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