AS 3101

Critical audit matters are not a

substitute for required explanatory language

It is expected that, in most audits, the auditor would determine that

at least one matter involved is especially challenging, subjective, or complex auditor judgment

A critical audit matter is any matter arising from the audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements (2) involved especially challenging, subjective, or complex auditor judgment.

The auditor's unqualified report includes

-Basic elements -Communication regarding critical audit matters -Other explanatory language (or an explanatory paragraph) -Information about certain audit participants

For each critical audit matter communicated in the auditor's report the auditor must:

-Identify the critical audit matter; -Describe the principal considerations that led the auditor to determine that the matter is a critical audit matter; -Describe how the critical audit matter was addressed in the audit; -Refer to the relevant financial statement accounts or disclosures that relate to the critical audit matter.

he auditor's report contains either an expression of opinion on the financial statements, taken as a whole, or

An assertion that an opinion cannot be expressed

Factors to consider

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he auditor is in a position to express an unqualified opinion on the financial statements when

The auditor conducted an audit in accordance with the standards of the Public Company Accounting Oversight Board ("PCAOB") and concludes that the financial statements, taken as a whole, are presented fairly, in all material respects, in conformity with the applicable financial reporting framework

The following language, including the section title "Critical Audit Matters," should precede critical audit matters communicated in the auditor's report: JUST READ A LOT

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Basic elements

Title Addressee Opinion Basis for opinion Signature, tenure, location and date

the audit documentation should be in sufficient detail to

enable an experienced auditor, having no previous connection with the engagement, to understand the determinations made to comply with the provisions of this standard.