AICPA Issues Proposed SAS on Material Misstatement in Financial Statements

The AICPA has issued a proposed Statement on Auditing Standards (SAS), Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement, which would supersede SAS No. 122, as amended, as well as Section 315 of the same title, and would amend various AU-C sections in AICPA Professional Standards.

The proposed SAS is intended to “enhance the requirements and guidance on identifying and assessing the risks of material misstatement” and would revise the definition of significant risks.

Comments on the proposed SAS are due by November 25, 2020. For more information, see the press release on the AICPA’s Web site.