Applying and Scaling Audit Risk Assessment Procedures Under SAS No. 145

Learn the ins and out of SAS No. 145

In October 2021, the AICPA Auditing Standards Board (ASB) issued SAS No. 145, Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement.

SAS No. 145 supersedes SAS No. 122, as amended, section 315 of the same title and is designed to address deficiencies identified in auditors’ risk assessment procedures.

SAS No. 145 does not fundamentally change the key concepts underpinning audit risk. It clarifies and enhances certain aspects of the identification and assessment of the risks of material misstatement to drive better risk assessments and, therefore, enhance audit quality.

Become familiar with the latest changes

Primary changes introduced by SAS No. 145 include:

• A revised definition of significant risk.
• Revised requirements to evaluate the design of certain controls within the control activities component, including general information technology (IT) controls.
• A new requirement to separately assess inherent risk and control risk.
• A new requirement to assess control risk at the maximum level.
• A new “stand-back” requirement intended to drive an evaluation of the completeness of the auditor’s identification of significant classes of transactions, account balances and disclosures.
• Revised requirements relating to audit documentation.
• New guidance on scalability.
• New guidance on maintaining professional skepticism.

In addition, learn the ins and outs of AU-C section 315, including:

• How to use it
• The steps in applying it
• Considerations when using it

Key Topics

• Changes and enhancements contained in SAS No. 145
• Risk assessment process and procedures
• Obtaining an understanding of the entity and its environment
• Obtaining an understanding of the entity’s system of internal control
• Identifying and assessing the risk of material misstatement

Learning Outcomes

• Distinguish the key concepts addressed by SAS No. 145, Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement
• Determine the auditor's role in the risk assessment process and identify the auditor’s requirements for performing risk assessment procedures.
• Determine the scope, objectives, and key definitions contained in AU-C section 315.
• Identify the auditor requirements for obtaining an understanding of the entity and its environment, the applicable financial reporting framework, and the entity’s system of internal control.
• Determine the required risk assessment procedures regarding the auditor’s understanding and evaluation of the entity’s control environment, risk assessment process, and process for monitoring the system of internal controls.
• Determine the required risk assessment procedures regarding the auditor’s understanding and evaluation of the entity’s information and communication and control activities.
• Determine the required procedures for identifying and assessing the risks of material misstatement.
• Identify the relevant requirements of linking risk assessment to further audit procedures.

Who Will Benefit

• CPAs
• Peer reviewers
• AICPA members
• Auditors