The New Audit Rules: Preparing for SAS 143-145

New auditing standards were issued clarify and align existing standards and to enhance the risk assessment requirements.

Statements on Auditing Standards (SAS) 143-145 will change and enhance the requirements for auditing estimates, the use of specialists, and the risk assessment process for audits of periods ending on or after December 15, 2023.

These new standards will affect your next audit. Learn why they’re being implemented, the changes they will require to the audit process, and how to prepare for an audit under the new standards.

What are the new SAS requirements?

SAS 143

This standard provides additional guidance on addressing factors relating to accounting estimates and completing audit procedures to address the risks associated with these estimates.

The standard was created due to the increasing complexity of financial reporting requirements, various changes in business practices and the evolving economy, and the need for auditors to obtain quality audit evidence to support accounting estimates.

SAS 144

This standard provides additional guidance on the auditor’s use of specialists in a financial statement audit.

SAS 144 was issued to modernize auditing standards related to the use of specialists by management and auditors due to the increasing use of specialists and increasing complexity of financial reporting standards.

SAS 145

This standard provides guidance revising risk assessment in audits, as well as changing the auditor’s responsibilities in understanding an entity’s internal control system. This guidance also focuses on IT general controls.

As technology is changing rapidly, SAS 145 requires auditors to consider some of these key changes, including evaluating IT in risk assessment.

What can we expect from these new standards?

These new standards will change the way auditors perform risk assessments and certain audit testing and could lead to additional audit requests.

Requests related to accounting estimates

For SAS 143, management may be asked to provide clarification on the inputs used in making the estimates, along with details on the process used to obtain the information. Auditors will be required to evaluate the data reliability used in determining the accounting estimate and whether it was developed by management or obtained from independent sources.

Requests related to specialists

For SAS 144, there could be additional requests surrounding specialist’s work. Potential requests could include:

• Documentation surrounding the work and findings,
• The specialist’s qualifications and independence,
• Different methods or assumptions used, and
• The data used for the conclusion.

With all these items, the auditor can determine if the work of the specialist is appropriate and therefore place reliance on the work provided.

Requests related to internal controls

For SAS 145, the auditor will be required to ask more questions surrounding the entity’s internal control system. As this standard enhances the requirements regarding an entity’s internal controls and assessing the control risk differently, questions will include:

• The use of IT in the entity’s structure,
• The processes surrounding the structure,
• Who is involved in the process, and
• How it supports the business operations.

How we can help

SAS 143-145 will cause changes to your upcoming audits. We can help you be prepared for those changes by assisting you in understanding and anticipating the impact the revised standards will have on the auditor’s procedures and the information your auditors will request from you.

Contact us

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