Will PCAOB's New Audit Rule Trigger Shareholder Litigation?

Law360 (October 16, 2019, 5:18 PM EDT) -- Over the past two and a half months, auditors of the largest publicly traded companies have communicated critical audit matters, or CAMs, in their audit reports.[1] CAMs are the things that keep the auditor up at night — those matters that involve especially challenging, subjective or complex auditor judgment.[2]

According to the Public Company Accounting Oversight Board, these new disclosures were needed to reduce the information asymmetry between investors and auditors, which should, in turn, reduce the information asymmetry between investors and management about the company’s financial performance.[3]

Not surprisingly, companies and their auditors expressed concerns that reporting CAMs would increase...

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