Early Evidence on the AS 3101 Critical Audit Matters Disclosure

16 Pages Posted: 14 Nov 2019

See all articles by Dana Hollie

Dana Hollie

The University of Toledo; U.S. Securities and Exchange Commission

Date Written: October 11, 2019


As the deadline looms for companies to comply with AS 3101, the new critical audit matters (CAM) disclosure in the independent auditor’s report, this study evaluates how June 30th fiscal year-end large accelerated filers have already met the deadline with reported CAMs, and provides some insights to companies still looking ahead toward this part of the audit process. Firms reported between one to four CAMs each with the average disclosure consisting of 1.74 CAMs, with 100% of the firms disclosing at least one CAM. We found that 48% of the CAMs that were reported for these firms were related to (1) revenue recognition and, (2) the assessment & impairment of intangibles. And, 57% of the CAMs categorized as acquisition-related issues was related to assessing intangibles as part of an acquisition. Additionally, 84.5% of the firms fall within the manufacturing (51.7%) and services (32.8%) industries. As we are in the time period when December year-end firms must get this process moving, this study provides both firms and auditors with some insights to understanding some of the key challenges that can complicate the audit process and gives them an opportunity to devise a more focused strategic plan of action to get to the December year-end audit.

Keywords: Critical audit matter, PCAOB, CAM

JEL Classification: M41, M42

Suggested Citation

Hollie, Dana, Early Evidence on the AS 3101 Critical Audit Matters Disclosure (October 11, 2019). Available at SSRN: https://ssrn.com/abstract=3481403 or http://dx.doi.org/10.2139/ssrn.3481403

Dana Hollie (Contact Author)

The University of Toledo ( email )

College of Business and Innovation
2801 W. Bancroft
Toledo, OH 43606
United States

U.S. Securities and Exchange Commission ( email )

100 F Street, NE
Washington, DC, DC 20549
United States

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