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| Bangladesh Standard on Audit(BSA-530) |
What is Bangladesh standard on Audit-BSA-530? Describes in details:
Bangladesh Standard on Auditing (BSA) 530, titled "Audit sampling", provides guidance on how auditors should apply sampling techniques during the audit process to obtain sufficient appropriate audit evidence.
Here are the key points of BSA 530:
1.Objective:
The primary objective of BSA 530 is to guide auditors in designing and selecting audit samples that are representative and provide sufficient evidence to form an audit opinion. Audit sampling helps auditors make inferences about the entire population based on a smaller sample.
2.Types of Audit Sampling:
Statistical Sampling: This involves using mathematical techniques to select samples and evaluate results. It allows auditors to quantify sampling risk and draw conclusions with a known level of confidence.
3. Non-Statistical Sampling:
In this approach, the auditor uses professional judgment to select samples, without applying statistical methods.
4. Sampling Techniques:
Random Sampling: Selecting items randomly from the population, giving all items an equal chance of being chosen.
Systematic Sampling: Selecting items at regular intervals from a population.
Judgmental Sampling: The auditor selects items based on their judgment, focusing on areas of higher risk or importance.
5. Determining Sample Size:
The sample size must be sufficient to reduce sampling risk to an acceptably low level. Factors influencing sample size include the population size, the expected misstatement, the level of assurance required, and the tolerable error.
6. Evaluating Results:
After testing the sample, the auditor evaluates the results and uses professional judgment to determine whether the sample findings can be extrapolated to the entire population. If the results indicate potential misstatements, the auditor may need to perform additional procedures.
7. Sampling Risk:
This refers to the risk that the sample selected is not representative of the entire population. The auditor must manage this risk by ensuring the sample is adequately designed and the conclusions drawn from it are reasonable.
8. Documentation:
The auditor must document the sampling methodology, sample selection process, and evaluation of results to provide a clear rationale for conclusions drawn from the sample.
In summary, BSA 530 provides auditors with the principles and techniques to apply audit sampling in an effective manner. This helps auditors obtain sufficient and appropriate evidence when testing large populations, ensuring that their audit conclusions are well-supported by reliable data.