SAS No. 122, AU 315, Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement
Overview
If you do not understand the entity that you are auditing, you won’t know what type of transactions they should be entering into. As a result, you won’t recognize those transactions they should not be there. In other words, you will be performing the audit without having any idea of what you should be looking at. This statement requires that the auditor document their understanding of the entity and its environment that it operates in as well as assessing the risks of material misstatement.
Prior to this statement, auditors often assessed risk at maximum and did not evaluate internal controls. A big change made by this statement is that, while it allowed the auditor to continue to assess risk at maximum, they now must first evaluate internal controls in order to have a basis for making such an assumption. As a result, auditors are now required to document their evaluation of internal controls on every financial statement audit.
This presentation is an overview of the many procedures auditors are now required to perform and document on every audit related to their understanding of the entity and its environment and the basis for assessing the risk of material misstatement.
Highlights
- How the effect of a misstatement due to error effects the scope of our audit vs a misstatement due to fraud
- Inquires of management …….. and others
- The audit planning process; when we start and when we stop
- The importance of brainstorming and what two things should a talk about
- Revisions of our risk assessment
- Determining materiality
Prerequisites
None
Designed For
External and Internal Auditors; Fraud Examiners
Objectives
- Determining Risk
- Identify and assess the risk of material misstatement either due to error or fraud
- Distinguishing between an error of a fraud
- Understanding intent
- Evaluating the internal control process – When it begins and when it stops
- Developing risk assessment procedures
- Understanding the dangerous of complex transactions
Preparation
None
Notice
This course is offered by a 3rd party vendor and will not be accessible in the My CPE Tracker section of the ISCPA website. Course access information will be emailed directly to you by Accounting Continuing Professional Education Network (ACPEN).
Leader(s):
Leader Bios
Dennis Dycus, Dennis Dycus CPA, CFE, CGFM
Mr. Dennis F. Dycus, CFE, CPA, CGFM, presently serves as the Director of the Division of Municipal Audit for the Office of the Comptroller of the Treasury, State of Tennessee. The Division is responsible for the annual audit of all municipalities, utility districts, school activity and cafeteria funds, housing authorities, certain not-for-profit organizations and other quasi-governmental entities in the State of Tennessee. From the beginning of his career with a national accounting firm, through the last 37 years of involvement with the audits of all forms of governmental entities, he brings a wealth of practical experience to his presentations. A graduate of Western Kentucky University, Mr. Dycus is a frequent guest speaker/lecturer for various college business/accounting classes, professional associations, local, state and national conferences and not-for-profit organizations. He is also a member of the Tennessee Society of Certified Public Accountants, the Association of Government Accountants, where he previously served as chapter president; the Government Finance Officers Association, and the Association of Certified Fraud Examiners, where he also served as chapter president and is a former member of both the Associations Board of Regent and ACFE Foundation as well as a member of their instructor faculty on a national basis. Mr. Dycus has developed and/or conducted training programs in all fifty states, Puerto Rico, Guam, Canada and Europe, for organizations such as the Association of Certified Fraud Examiners; the American Institute of Certified Public Accountants; numerous state CPA societies; the Government Finance Officers Association; the Association of Government Accountants; the National Association of State Auditors, Comptrollers and Treasurers; Westcott Communications, Inc.; the Organization for Security and Co-Operation in Europe; New York Presbyterian Hospital; IBM; HCA; NYC Presbyterian Hospital, Saturn, Inc.; the US Department of Labor; the Government Accountability Office; the Internal Revenue Service; Bisk Education, Inc.; Nichols Education, Inc.; numerous state audit organizations and individual professional firms.
Non-Member Price $129.00
Member Price $99.00