Takeaways from a PLI program that I recently viewed about CAMs (critical audit matters) . . . .

The following are some of my takeaways from a PLI program that I recently viewed:

– By definition CAMs (critical audit matters) pertain, if at all, only to audit matters that involve especially challenging, subjective or complex auditor judgment. In other words, whereas issues pertaining to “reasonableness” or “materiality” are more objective, the evaluation of possible CAMs is subjective and different auditors could entirely disagree on the same fact patters. This could create an interesting dynamic between the auditor on the one hand, and the audit committee, or the board, or the CEO, or the CFO on the other hand. On question might be: how far up the ladder within the auditing firm did the auditor in charge run the possible CAM?

– CAMs apply only to that particular audit. A CAM involves the discussion or disclosure of original information about that particular audit, but not the disclosure of original information about the company.

– An audit committee should do CAM dry runs with the auditor, such as during or even before the third quarter of the fiscal year. Also consider, for example, if it is too early for a CAM dry run, request your auditor to discuss what the CAMs might have been for the prior audit year if the CAM provisions had been in effect during that year. If your auditor isn’t proposing dry runs, she or he should be. Why isn’t she or he?

– CAMs are the auditor report. CAMs are not the company’s report.

– Expect that most audits will have one or more CAMs.

– The audit committee should be involved in the CAM process.

– No one wants the CAMs to cause unintended consequences.

Search for the words CAM or CAMs within this blog to see my several other posts about CAMs.


Remember, every case and situation is different. It is important to obtain and evaluate all of the evidence that is available, and to apply that evidence to the applicable standards and laws. You do need to consult with an attorney and other professionals about your particular situation. This post is not a solicitation for legal or other services inside of or outside of California, and, of course, this post only is a summary of information that changes from time to time, and does not apply to any particular situation or to your specific situation. So . . . you cannot rely on this post for your situation or as legal or other professional advice or representation.

Thank you for reading this website. I ask that you also pass it along to other people who would be interested as it is through collaboration that great things and success occur more quickly.

Best to you, David Tate, Esq. (and inactive California CPA) – practicing in California only.

I am also the Chair of the Business Law Section of the Bar Association of San Francisco.

Blogs: Trust, estate/probate, power of attorney, conservatorship, elder and dependent adult abuse, nursing home and care, disability, discrimination, personal injury, responsibilities and rights, and other related litigation, and contentious administrations http://californiaestatetrust.com; Business, D&O, board, director, audit committee, shareholder, founder, owner, and investor litigation, governance, responsibilities and rights, compliance, investigations, and risk management  http://auditcommitteeupdate.com

The following are copies of the tables of contents of three of the more formal materials that I have written over the years about accounting/auditing, audit committees, and related legal topics – Accounting and Its Legal Implications was my first formal effort, which resulted in a published book that had more of an accounting and auditing focus; Chapter 5A, Audit Committee Functions and Responsibilities, for the California Continuing Education of the Bar has a more legal focus; and the most recent Tate’s Excellent Audit Committee Guide (February 2017) also has a more legal focus:

Accounting and Its Legal Implications

Chapter 5A, Audit Committee Functions and Responsibilities, CEB Advising and Defending Corporate Directors and Officers

Tate’s Excellent Audit Committee Guide

The following are other summary materials that you might find useful:


Audit Committee 5 Lines of Success, Diligence, and Defense - David Tate, Esq, 05052018

COSO Enterprise Risk Management Framework ERM Components and Principles

From a prior blog post which you can find at https://wp.me/p75iWX-dk if the below scan is too difficult to read:

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