Critical audit matters (CAMs) provide the opportunity for auditors to explain their view of the risks and financial implications of climate change and ESG. According to an AASB report, potential implications often arise from assumptions and models for asset impairment, changes in the useful life of assets, changes in the fair valuation of assets, increased costs and/or reduced demand for products and services affecting impairment calculations, potential provisions and contingent liabilities arising from fines and penalties, and changes in expected credit losses for loans and other financial assets.

In this article, Audit Analytics examines ESG notes in CAMs.