The Public Company Accounting Oversight Board’s (PCAOB) Investor Advisory Group (IAG) presented three exemplary critical audit matters (CAMs) or key audit matters (KAMs) in 2024 audit reports, as selected by the panel among those nominated by the public.
The following three received the most votes among IAG members:
- Boeing—CAM on cost estimates for fixed-price development contracts by Deloitte LLP
- Rolls Royce—KAM on long-term contract accounting and associated provisions by PricewaterhouseCoopers UK
- Compass Group—KAM on uncertain direct tax provisions by KPMG UK
The project, which began last year, is spearheaded by IAG member Jeffrey Mahoney, general counsel of the Council of Institutional Investors. This was the second annual call for the most decision-useful CAMs or KAMs. Mahoney presented the results during a meeting of the IAG in Washington on September 25, 2025.
In the inaugural vote in 2024, two of the three best CAMs were by Deloitte & Touche LLP for its audit of Berkshire Hathaway Inc., and the other was by Ernst & Young LLP for its audit of Moderna, Inc.
For this year, the panel voted among 20 nominated matters; 11 were CAMs, and all 9 KAMs were from U.K. companies that file 20-F with the Securities and Exchange Commission (SEC) as foreign private issuers.
CAMs are required under PCAOB standards. KAMs were developed by the International Auditing and Assurance Standards Board.
All 20 audit matters nominated were by Big Four firms: seven from PricewaterhouseCoopers LLP, six each from Deloitte LLP and KPMG LLP, and one from Ernst & Young LLP.
Details About Best CAMs/KAMs
Boeing
CII’s Mahoney said that Boeing’s CAM as well as the company’s two other CAMs were nominated by a prominent financial analyst at a large active asset manager who chose to remain anonymous.
Mahoney read an email by Anonymous, sharing the following as the basis for the nomination:
“This is a good CAM because it deals with an accounting issue where significant and complex judgments are applied by management in the accounting, and the disclosure places a spotlight on an issue that is material to investors.
Further, the auditor follows up on this issue with a good amount of specificity about the nature of the issue and the audit procedures they undertook to understand and assess this exposure.
As a result of these not being boilerplate disclosures, financial statement users were able to come to have a more nuanced understanding of a material issue for the company, and we have a better appreciation and understanding for how the auditor has gone about navigating this exposure in a thoughtful and thorough manner.”
Anonymous indicated that Deloitte gained additional credibility with investors by providing similar levels of detail on Boeing’s two other CAMs.
Boeing’s three CAMs “give investors a better understanding of what the audit fees they are paying as the owners of the company are buying,” Anonymous said.
Rolls-Royce
The KAM for Rolls-Royce was nominated by Elizabeth Mooney, investor, board trustee, and former partner of Capital Strategy Research of the Capital Group Companies.
In an emailed statement to Mahoney, Mooney said that PwC’s KAM “is decision useful to investors as it is relatively specific about the management estimates which required auditor judgment.”
“Knowing which judgments and assessments were “challenged” by the auditors is helpful for modeling earnings, cash flow and valuation, and for conducting scenario analysis,” she explained. “This KAM also alludes to what the auditors found in the last sentence as follows, ‘We concur that management’s estimates for long-term contract accounting and associated provisions are materially appropriate, in the context of the financial statements taken as a whole.'”
Mooney explained that understanding what the auditors found is of great interest because investors read the auditor’s report to see the financial statements through the eyes of the auditor.
However, she had some advice to make the KAM better.
It “could have been revised to be more decision useful to investors by specifying, for example, whether management’s estimates for long-term contract accounting were at the low-end or high-end of the auditor’s acceptable range for important line items such as revenues and provisioning,” Mooney noted.
Compass Group
Jared Goodman, senior equity portfolio manager of the Colorado Public Employees Retirement Association who nominated KAM for Compass, a contract foodservice company, said that the disclosures told a story to investors, rather than just fulfilling the minimum regulatory requirement.
“There’s a vast difference in quality,” Goodman said during the IAG meeting. “These KAMs are helping me to understand the audit process, how difficult the audit process is, how they dealt with those difficulties. The KAMs are engaging. They use numbers, they detail the audit steps—versus many KAMs just use legalese and hedging language.”
Further, he said KPMG had four KAMs when many audit reports have only one or two.
“So, the breadth is great,” Goodman said.
He said he chose the tax provision because investors are not tax experts and it’s an important topic.
“It’s a complex issue, and they do a really good job of identifying that, helping investors understand the complexity and the challenge of being an auditor,” he said.
In terms of improvements he wants to see, Goodman said that “it would be nice to have a greater view of more of an opinion…. They say everything’s fine, but you know what level of confidence? What were you concerned about? So there could be more detail.”
Mahoney said that a final report on the most useful CAMs/KAMs will be issued before the end of the year, providing more details.
The objective of this yearly exercise is to “encourage auditors to continue to improve the CAM disclosures so that they are more useful to investors,” he said.
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