For the third year in a row, the Public Company Accounting Oversight Board (PCAOB) Investor Advisory Group (IAG) is inviting the public to send in nominations for the best critical audit matters (CAMs) or key audit matters (KAMs) in audit reports included in 2025 Form 10-Ks for domestic companies and Form 20-Fs for foreign private issuers.
The deadline is June 30, 2026.
Auditors of domestic public companies disclose CAMs, while KAMs apply to auditors who follow standards set by the International Auditing and Assurance Standards Board.
The request for nominations was announced by Jeffrey Mahoney, general counsel of the Council of Institutional Investors (CII) and a member of the IAG during the panel meeting in Washington on April 29.
Mahoney, who began this initiative two years ago with the first call for nominations during an IAG meeting in April 2024, said the panel wants the general public—including audit committee chairs and members, auditors, financial analysts, investors, and academics—to submit nominations for the most useful CAMs or KAMs.
Submissions can be made anonymously.
“One of our three winners last year was submitted anonymously,” Mahoney noted.
He said the panel wants a maximum 500-word explanation about why the nominated audit matters are 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. The three CAMs or KAMs receiving the highest votes will be identified and discussed in an IAG report to be issued before the end of this year.
“So, the objective of this annual project is to encourage public company auditors to voluntarily improve the quality of the disclosures of critical audit matters so they’re more consistent with the intent of the PCAOB standard” for CAMs, Mahoney said.
His requests come as both the number and the quality of CAMs have been relatively low.
The average number of CAMs has been statistically decreasing, according to PCAOB research.
The PCAOB in December 2022 published a second interim analysis of CAMs, which said that there were 1.69 CAMs per audit report on average from June 2019 to June 2020 period for large accelerated filers. That average went down to 1.61 from June 2020 to June 2021. The average CAM number dropped even more to 1.43 from June 2021 to May 2022.
Non-accelerated filers, which had a delayed compliance date, reported even fewer CAMs on average. From December 2020 to December 2021, smaller companies’ auditor reports had 1.23 CAMs. From December 2021 to May 2022, the average dropped to 1.12.
Moreover, the matters disclosed often did not provide much useful insight into what auditors really thought about the company’s financial condition, but instead described what they did.
“So I would respectfully request that anyone who’s attending today’s meeting, whether it’s in person or virtually, please consider nominating at least one key or critical audit matter from the 2025 reports by the June 30 deadline,” Mahoney said, asking that submissions be sent to him at CII.
The best CAMs for the inaugural year for this request for nomination went to Deloitte & Touche for its audit of Berkshire Hathaway Inc. and Ernst & Young for its audit of Moderna, Inc.
Last year, the IAG selected the following three: Boeing audited by Deloitte, Rolls-Royce by PricewaterhouseCoopers, and Compass Group by KPMG.
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