Early last month, Silicon Valley Bank collapsed just 14 days after having received a clean bill of health from its auditor, KPMG. Its audit opinion was silent on what actually brought down the bank — unrealized bond losses and its ability to hold them given a reliance on potentially flighty deposits. This has prompted questions regarding the effectiveness of "critical audit matters" (CAMs) as a regulatory measure.
The US Public Company Accounting Oversight Board (PCAOB) introduced CAMs in 2017 to "breathe life into the audit report." Auditors are required to identify any critical audit matters when they sign off on a public company's books, to help investors decode risks and uncertainties buried in financial statements.
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