FAQs about CAMs
February 14, 2026
If you’ve ever skimmed the auditor’s report for a public company and noticed a section titled critical audit matters (CAMs), you may have wondered what it means and whether it’s relevant to you. CAMs highlight complex, high-judgment areas that drive audit inquiries and testing procedures. Even for private companies, understanding audit risks can be helpful, especially if you’re planning for growth, seeking outside investment or preparing for a future merger. Here’s a breakdown of the basics.
What are CAMs?
The Public Company Accounting Oversight Board (PCAOB) adopted Auditing Standard (AS) 3101, The Auditor’s Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion. The guidance defines CAMs as matters that:
- Have been communicated to the audit committee,
- Are related to accounts or disclosures, which are material to the financial statements, and
- Require especially challenging, subjective or complex auditor judgment.
In simple terms, CAMs highlight the areas of a company’s financial statements that were most difficult to audit. They aren’t errors, red flags or signs of wrongdoing. Instead, they reflect areas where estimates, assumptions or accounting treatments required significant professional judgment.
Under AS 3101, auditors of public companies started reporting CAMs in their audit opinions in 2019. Historically, audit reports were largely pass/fail; either the financial statements were fairly presented, or they weren’t. CAMs provide more transparency to the audit process and give financial statement users more insight into audit risks. By describing these challenging areas, CAMs help readers better understand the company’s financial reporting risks.
What types of issues commonly become CAMs?
PCAOB guidance requires auditors to identify each CAM, explain the reason for its selection and support their conclusions with relevant financial information. Commonly cited CAMs include:
- Revenue recognition,
- Business combinations,
- Goodwill and intangible asset valuation,
- Uncertain tax positions or complex tax calculations, and
- Allowances and reserves that rely heavily on management’s judgment.
The guidance doesn’t provide a list of possible CAMs or prescribe a specific number of CAMs that must be included in an auditor’s report.
Does every audit report include CAMs?
CAMs are generally required for public company audits, but not for private company audits. That said, the concepts behind CAMs are still relevant. Many private companies face similar judgment-heavy accounting areas, and auditors evaluate those risks even if they aren’t formally labeled as “CAMs” in the audit report.
Under the American Institute of Certified Public Accountants’ auditing standards, auditors communicate significant risks and judgment-heavy areas to private business owners and others charged with governance, often during planning and closing meetings. These issues may also be found in management letters, typically as recommendations for improved documentation or internal controls. If a private business is considering going public, merging with a public company or attracting sophisticated investors, CAM-type issues will almost certainly be part of the conversation with owners or board members.
Where do you go from here?
CAMs help identify key financial reporting risks and serve as a roadmap for where accounting processes may need extra attention — especially during periods of growth, economic uncertainty or major transactions. Contact us to explore risk management issues that affect your business — and how you can stay ahead of them.
© 2026
