We examine in a controlled experiment whether discussing audit procedures that address a complex investment valuation issue in the critical audit matter (CAM) paragraph of the auditor’s report calibrates sophisticated users’ financial reporting risk (FRR) assessments. Our findings support this calibrating effect, that is, minimizing shifts in their risk assessments before versus after the realization of the risk event (i.e., a significant decline in the fair value of investments pre-empted earlier in the CAM disclosures). Minimizing large swings in users’ risk perceptions is an important consideration to the profession to minimize negative surprises and audit litigation. Our results support standard-setters’ views that discussing audit procedures in the CAM disclosures is value adding in calibrating sophisticated users’ FRR assessments.

Data Availability: Data are available from the authors on request.

JEL Classifications: D81; M42.

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