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New Auditing Standards SAS Nos. 142-145 #314126

Course Overview

Credit

Amount

CPA

Course Author: Steven C. Fustolo, CPA Field of Study (CPA): Auditing

Course Description

Course publication/revision date: This course was updated on 1/20/2026.

The objective of this course is to address the new auditing standards issued by the Auditing Standards Board as SAS Nos. 142-145.

The first segment of the course addresses SAS No. 142’s expanded guidance on audit evidence in a financial statement audit. Topics include: evaluating audit evidence; testing audit evidence; relevance and reliability of audit evidence including its source; susceptibility to management bias; corroborative or contradictory information; evaluating whether information is sufficiently precise and detailed for the auditor’s purposes; and use of automated tools and techniques.

The second segment is a review of SAS No. 143’s guidance on accounting estimates including the degree of estimation uncertainty; risk assessment procedures related to accounting estimates; identifying and assessing the risks of material misstatement including responses to the assessment; indicators of possible management bias, and more.

The third segment consists of a review of SAS No. 144’s changes to auditing standards in connection with use of specialists (management and auditor specialists) and using price information obtained from external sources.

The final section addresses significant changes made by SAS No. 145 to the auditor’s understanding of an entity and its environment, and the assessment of risks of material misstatement.

Table of Contents

SAS No. 142: Audit Evidence12

Objective	12
Introduction	12
Overview	12
Scope of SAS No. 142	15
General	15
Definitions	15
Requirements of SAS No. 142	16
General	16
Evaluating Information to be Used as Audit Evidence	17
Basis for Concluding on the Sufficiency and Appropriateness of Audit Evidence	27
Use of Automated Tools and Techniques in Obtaining Audit Evidence	28
Inconsistencies in, or Doubts About the Reliability of, Audit Evidence	29
EXHIBIT A	30
REVIEW QUESTIONS	34
SUGGESTED SOLUTIONS	35

SAS No. 143: Auditing Accounting Estimates and Related Disclosures37

Objective	37
Introduction	37
General	37
Overview of SAS No. 143	39
General	39
Degree of Estimation Uncertainty	41
Key Concepts Found in SAS No. 143	42
Scope of SAS No. 143	45
General	45
Definitions Used in SAS No. 143	45
Requirements of SAS No. 143	46
Risk Assessment Procedures and Related Activities	46
Identifying and Assessing the Risks of Material Misstatement	50
Auditor Responses to the Assessed Risks of Material Misstatement	51
Evaluating Indicators of Possible Management Bias	55
Perform an Overall Evaluation Based on Audit Procedures Performed	56
Communication With Those Charged With Governance, Management, or Other Parties	57
Audit Documentation	57
Changes to Management Representation Letter	58
EXHIBIT A- The Revised Management Representation Letter	59
EXHIBIT B- Communications With Those Charged With Governance	61
EXHIBIT C- Understanding the Entity's Internal	63
REVIEW QUESTIONS	68
SUGGESTED SOLUTIONS	69

SAS No. 144: Amendments to AU-C 501, 540, and 620 Related to the Use of Specialists and Use of Pricing Information Obtained From External Information Sources71

Objective	71
Introduction	71
General	71
Definitions of SAS No. 144	72
Requirements of SAS No. 144	73
Amendments to AU-C 501, Audit Evidence - Specific Considerations for Selected Items	73
Amendments to AU-C 540, Audit Accounting Estimates and Related Disclosures	79
Amendments to AU-C 620, Using the Work of an Auditor's Specialist	83
REVIEW QUESTIONS	88
SUGGESTED SOLUTIONS	89

SAS No. 145: Understanding the Entity, Its Environment and Assessing the Risks of Material Misstatement91

Objective	91
Introduction	91
Definitions of SAS No. 145	93
Requirements of SAS No. 145	95
Risk Assessment Procedures and Related Activities	95
Obtaining an Understanding of the Entity, Its Environment, the Applicable Financial Reporting Framework, and the Entity's System of Internal Control	102
Identifying and Assessing the Risks of Material Misstatement	114
Evaluating the Audit Evidence Obtained From the Risk Assessment Procedures	117
Classes of Transactions, Account Balances, and Disclosures That Are Not Significant but are Material (The Stand-Back Provision)	117
Revision of Risk Assessment	118
Documentation	118
Appendices	119
REVIEW QUESTIONS	120
SUGGESTED SOLUTIONS	122

INDEX125

GLOSSARY126

Course Details

Author: Steven C. Fustolo, CPA

Mr. Fustolo is a partner with the Boston CPA firm of James J. Fox & Company and Director of the National Tax Institute, Inc. He is a frequent lecturer and author of numerous tax and accounting issues affecting closely held businesses. An AICPA author, Mr. Fustolo’s articles are regularly featured in The Practical Accountant and other publications. He is the author of Practice Issues: Compilation and Review, Accounting and Auditing Reference Guide, Everything You Never Wanted to Know About GAAP, Enron: Fraud, Deception and the Aftermath, FASB Review for Industry, and FASB, SSARS and SAS Update and Review and numerous other books and manuals that have been published by Practitioners Publishing Company (PPC) and Commerce Clearing House (CCH). He is the recipient of several Outstanding Discussion Leader awards from many professional organizations including the New York and Florida Societies of CPAs. Mr. Fustolo’s course entitled FASB, SSARS and SAS Update and Review continues to receive accolades and is regarded as one of the top live CPE programs in the country today with ratings that average 4.91 on a scale of 5.0. He speaks regularly for professional groups including being a guest lecturer at the AICPA Advanced Accounting and Auditing Technical Symposium. Mr. Fustolo is the recipient of the Elijah Watts Sells Award (AICPA) and Silver Medal (Massachusetts) for scores received on the CPA Examination.

Publication/Revision Date: 1/20/2026

Course Exam Questions (online): 20 (multiple-choice)

Program Delivery Method: NASBA QAS Self-Study

Available Formats of Course Text: PDF only or PDF plus printed copy sent in the mail

Course Level, Prerequisites, and Advance Preparation Requirements

License	Course Level	Prerequisites	Advance Preparation Requirements
CPA	Overview	None	None

* This program is appropriate for professionals at all organizational levels.

Sponsor ID Numbers

National Registry of CPE Sponsors ID: 107615

State CPA Board Sponsor ID Numbers (where applicable)

Florida Division of Certified Public Accounting: 0004761

Hawaii Board of Public Accountancy: 14003

New York State Board for Public Accountancy: 002146

Ohio Accountancy Board: CPE .51 PSR

Pennsylvania State Board of Accountancy: PX178025

Texas State Board of Public Accountancy: 009349

Learning Objectives

As a result of studying the course material, you should be able to meet the objectives listed below:

Identify an example of an attribute of information obtained as audit evidence
Recognize actions an auditor should perform in evaluating information used as audit evidence
Recognize attributes of information to be used as audit evidence
Identify an attribute that affects the reliability of information used as audit evidence
Recall functions on which an auditor can use automated tools and techniques
Identify an example of an accounting estimate related to classes of transactions, account balances and disclosures identified in SAS No. 143
Recognize how inherent and control risks should be assessed in accordance with SAS No. 143
Recognize an example of an inherent risk factor
Identify examples of the approaches that can be performed in assessing the risks of material misstatement from accounting estimates
Recall one of the amendments made to AU-C 501 by SAS No. 145 in connection with using the work of an external inventory-taking firm
Identify some instances in which an auditor may conclude that a specialist's work is not adequate
Identify a type of risk assessment procedure that an auditor can use in accordance with SAS No. 145
Recall examples of risk assessment procedures that an auditor may perform in SAS No. 145
Recognize how to perform risk assessment procedures when relying on information obtained from previous experience with an entity
Identify examples of risk assessment procedures to obtain audit evidence in accordance with SAS No. 145
Recognize a new requirement made by SAS No. 145 in connection with assessing inherent risk and control risk in an audit, and
Identify how an auditor should respond if the auditor does not plan to test the operating effectiveness of an entity's controls.

Online Book, Online Exam

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Hardcopy Book, Online Exam

$57.00