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SAS 145: Assessing the Risks of Material Misstatement

Scalability, Stand-Back Provision, Determining Inherent and Control Risk

Recording of a 110-minute CPE video webinar with Q&A

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Conducted on Monday, December 11, 2023

Recorded event now available

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This webinar will discuss implementing the significant revisions made to risk assessment by Statement of Auditing Standards (SAS) 145. The level of risk, or susceptibility of financial statements to material misstatement, guides the audit process. Our panel of experienced auditors will review the updated and new definitions in SAS 145 and walk CPAs through the process of identifying and assessing risks of material misstatement under the new standard.


While the new standard is intended to enhance risk assessments, SAS 145 is massive. It recognizes new complexities in audits as well as the use of automated tools and techniques, including the use of remote inventory observations with drones and video cameras and the use of audit data analytics. It includes updated and new definitions, clarifies the work effort related to the system of internal control, and is effective for audit periods ending on Dec. 15, 2023, and after.

Risk assessments set the course for an audit. Failure to sufficiently assess risk is a common deficiency cited in peer reviews. SAS 145 requires auditors to separately assess inherent risk and control risk and provides a new definition of significant risk. There are unique considerations when an auditor omits testing controls and assesses control risk at the maximum level.

SAS 145 is intended to be scalable. Recognizing that the size and complexity of engagements vary, SAS 145 allows an auditor to employ judgment when designing risk assessment procedures to comply with these guidelines. Also new is a stand-back provision that essentially requires the auditor to evaluate the completeness of significant classes of transactions, account balances, and disclosures where risks of material misstatement reside. It is clear that SAS 145 may have various impacts on the audit process going forward.

Listen as our panel of A&A experts detail the new and updated aspects of SAS 145, Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement, for auditors.



  1. Assessing risk: an introduction
  2. Definitions
  3. Assessing risks
    1. Inherent risk
    2. Control risk
  4. Maintaining professional skepticism
  5. Scalability
  6. Stand-back requirement
  7. Documentation
  8. Other considerations


The panel will cover these and other key considerations:

  • The interplay of inherent and control risk
  • Exercising judgment and scalability
  • Applying the new stand-back requirement
  • How assessing control risk at a maximum impacts an audit
  • Best practices for implementing SAS 145


Marciano, Philip
Philip Marciano, CPA, CGFM

Managing Director
CBIZ Marks Paneth

Mr. Marciano is a Managing Director and a member of the Nonprofit, Government and Healthcare Group located in our...  |  Read More

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