Recent feedback from the AICPA has emphasized the importance of performing an effective risk assessment to identify and evaluate the risk of material misstatement in a financial statement audit. SAS 145, the 2023 amendment to AU-C 315, makes significant changes to the extant risk assessment standard and certain changes to other standards as well. The amendments clarify confusion that the AICPA believes auditors experienced under the existing standard and also conforms, for the most part, to the IAASB standard on the same topic. SAS 145 has been effective for two years now starting with December 31, 2023 audits.
This course will focus on how to perform the risk assessment process under the new standard, providing participants with a summary of the changes to existing guidance. It will discuss linking the results of the risk assessment to further testing (internal control and substantive testing) and procedures performed in concluding on the evidence obtained. In addition, it will also discuss documentation and audit communications.
Learning Objectives
- Recall key concepts in the risk assessment standards, including various requirements
- Recognize how to implement the standards in practice
- Identify approaches to comply with professional standards while auditing in a virtual environment
Major Topics
- Audit process and planning
- Materiality, performance materiality, and tolerable misstatement
- Assessing the risk of material misstatement
- Understanding internal controls and when the auditor must evaluate the design and implementation of internal controls
- Designing procedures to test the effectiveness of controls
- Issues noted related to performing substantive procedures
- Documentation
- Communication with the Client and Governance
