Critical Audit Matters : The New Auditing Reporting Model

“A critical audit matter is defined as a matter that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex auditor judgment.”In view of subjectivity and judgment based elements involved in the determination of critical audit matters, as well as the move to a principles based framework – critical audit matters determined using such a framework, this presentation aims to highlight why a combination of bright line rules and high level principles should be applied to the more innovative phases involving critical decision making – the application of this combination of rules not only reflecting the level of flexibility offered by such a combination, but also the priority accorded to such management decisions which may also embody tactical and strategic elements