PCAOB Advisory Group Report Calls for Improved Critical Audit Matters, Cites UK’s Superior Disclosures
January 20, 2026
The Public Company Accounting Oversight Board (PCAOB) in early January 2026 posted a report of the Investor Advisory Group’s (IAG) three audit disclosures—Critical Audit Matters (CAMs) in the U.S. and Key Audit Matters (KAMs) internationally—that it considers the most useful to investors. The selections were first presented orally during the IAG’s September 25, 2025, meeting with fewer details, and were later expanded into the full written report.
IAG member Jeff Mahoney, general counsel of the Council of Institutional Investors, leads the project. This is the second time the panel has evaluated nominated disclosures, which were contained in the audit reports of 2024 annual reports.
The IAG opened nominations in early 2025. By the June 30 deadline, the group received 20 nominations from 11 registrants, spanning both CAMs and KAMs.
Big Four audit firms—Deloitte, Ernst & Young, PricewaterhouseCoopers, and KPMG—were represented, with Rolls‑Royce Holdings plc generating the largest cluster of nominations, followed by Compass Group plc, and the Boeing Company.
The Three Most Decision‑Useful Matters of 2024
The IAG members voted in August 2025, and the following received the most votes:
Boeing — Cost Estimates for Fixed‑Price Development Contracts (Deloitte; nominated anonymously)
Rolls‑Royce — Long‑term contract accounting and associated provisions (PwC; nominated by Elizabeth Mooney, board member, former partner of Capital Strategy Research)
Compass — Uncertain direct tax provisions (KPMG; nominated by Jared Goodman, senior portfolio manager at the Colorado Public Employees’ Retirement Association)
The Boeing CAM revealed auditor specificity unusual for U.S. reports. As the anonymous nominator relayed the message to the panel via CII Mahoney, the CAM gives users “a more nuanced understanding of a material issue” along with insight into “how the auditor… navigated this exposure in a thoughtful and thorough manner.”
On Rolls‑Royce, Mooney, in an email which was read by Mahoney, emphasized the value of including a line that the auditor concurs 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.” She added, “understanding what the auditors found is of great interest to investors, since investors use the auditor’s report to see the financial statements through the eyes of the auditor.”
Goodman, who nominated Compass’ KAM on tax provisions, told the IAG that UK KAMs “are telling me, telling other investors a story,” adding that they help investors understand the process auditors go through to test tax estimates because “taxes are often a black box for investors, and an area of high measurement uncertainty.”
UK Continues to Outperform US in Audit Transparency
Goodman during the discussion emphasized the contrast between U.K. KAMs and U.S. CAMs, saying “the U.K. continues to lead the world in the quality of auditor reports, and likely overall audit quality.”
He highlighted how U.K. KAMs often include conclusions, quantitative data, and the auditor’s perspective—elements usually absent from CAMs, adding that “CAMs appear to be … serving the needs of management, which is a fundamental concern.”
IAG’s Broader Findings: CAMs Need More Depth, Breadth, Outcomes
The IAG believes that CAMs can be improved as follows:
CAMs rarely state what auditors actually found; thus, the disclosures should include what the auditors found;
CAM topics are too routine; thus, the disclosures should explore non-routine topics that are more likely to provide decision-useful information;
CAM counts are declining; thus, the number of CAMs reported should increase.
Additional suggestions to the MIAG to improve CAMs included:
Adding quantitative information to the body of the disclosures;
Providing more descriptions of the audit procedures performed;
Using more bullet points; and
Increasing coverage of CAMs on investment research platforms
Nomination Data Points:
11 CAMs, 9 KAMs
PwC leads with 7, followed by KPMG and Deloitte with 6, and EY with 1.
This contrasts with CAMs or KAMs nominated for 2023 cycle:
11 CAMs, 15 KAMs
Deloitte led with 13, followed by EY with 10, and 3 by PwC. KPMG had none.
“Looking forward, the MIAG continues to encourage auditors to voluntarily improve the quality and quantity of the information communicated to investors in their auditor’s reports,” the report notes.
The IAG expects to open nominations for the 2025 cycle in spring 2026.
[Thomson Reuters]
