Risk Assessment Under SAS No. 145: The Key to Audit Quality?

Overview

The AICPA has identified risk assessment as an area of focus for its Enhancing Audit Quality Initiative as deficiencies in auditor's risk assessment procedures continue to be a common issue identified in peer review. SAS No. 145, Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement, was written to improve the quality of risk-based audits. While key concepts do not fundamentally change, the standard works to clarify and enhance certain aspects of the identification and assessment of the risks of material misstatement to drive better risk assessments and hopefully overall enhance audit quality. This event may be a rebroadcast of a live event and the instructor will be available to answer your questions during the event.

Prerequisites

General knowledge of the risk assessment standards.

Objectives

After attending this presentation you will be able to...

• Recognize key risk assessment concepts applying to SAS No. 145 in identifying and assessing risks of material misstatement
• Determine the impact to the risk assessment process and the work to be performed
• Identify risk assessment procedures related to the various components of the entity’s system of internal control
• Recall how to scale risk assessment requirements to be effective and efficient, particularly for less complex entities
• Recall when and how to evaluate design and determine the implementation of controls
• Recognize risk assessment requirements to appropriately identify risks arising from the use of information technology (IT) and related general IT controls
• Identify potential risk assessment and related audit documentation traps

Highlights

The topics that will be covered in this class include:

• New concepts due to the issuance of SAS No. 145
• Revised requirement to separately assess inherent risk and control risk
• A new definition of significant risk
• New emphasis on IT controls and risk of material misstatement
• New guidance on maintaining professional skepticism
• Revised requirements to evaluate the design of certain controls
• Revised requirements regarding audit documentation
• New guidance on scalability