SAS 145 and IT Risk Assessment

Matt Gardiner, CPA, CFE, Audit Manager

In today’s rapidly evolving digital landscape, it is imperative for businesses to stay ahead of potential IT risks. A recently introduced auditing standard, SAS 145, emphasizes the importance of a robust risk assessment process, particularly focusing on the IT environment. Here’s why understanding SAS 145 and conducting a thorough IT risk assessment is crucial for your business.

What is SAS 145?

SAS 145, issued by the American Institute of Certified Public Accountants (AICPA), revises the existing standards for auditor’s risk assessment, with a heightened focus on identifying and addressing risks that could impact financial reporting. It emphasizes the need for auditors to gain a deeper understanding of the client’s IT environment, making IT risk assessment a critical component of the overall audit process. As a result, our staff will likely inquire about your IT environment when it comes time for your audit this year.

Why IT Risk Assessment Matters

A comprehensive IT risk assessment helps in identifying vulnerabilities within your IT environment that could potentially compromise your financial data. Here are key areas to consider:

Understanding of the IT Environment: Ensure you have a detailed map of your IT infrastructure. Identify all programs and software that have access to your financial data. This visibility helps in pinpointing potential weak spots and unauthorized access points.

Regular Backups: Establish a regular backup schedule for your data. Regular backups not only safeguard your data against loss or corruption but also ensure business continuity in case of a cyber-attack or system failure.

Password Policies and Multi-Factor Authentication: Implement strict password policies requiring periodic changes. Enhance security by adopting multi-factor authentication (MFA), which adds an extra layer of protection by requiring a second form of verification.

Monitoring and Updates: Continuously monitor your IT systems for any unusual activity. Regularly update your software and systems to protect against known vulnerabilities and exploits.

To strengthen your IT risk management, consider conducting a thorough assessment of your current IT environment. Identify and address any vulnerabilities, ensure regular backup of your data, and enforce stringent security measures like MFA and regular password changes.

By proactively managing your IT risks, you protect your business from potential cyber threats. For a detailed assessment and personalized recommendations, contact our team today.