Bangladesh
Standard on Audit(BSA-700)
What is the Bangladesh standard on Audit-BSA-700? Describes in details:
Bangladesh Standard on Auditing (BSA) 700, titled "Forming an Opinion and Reporting on Financial Statements", provides guidance to auditors on how to form an audit opinion and the content of the audit report, which expresses the auditor's conclusion on whether the financial statements present a true and fair view.
Here are the key points of BSA 700:
1. Objective:
The objective of BSA 700 is to ensure that auditors form an appropriate audit opinion based on sufficient and appropriate audit evidence and clearly communicate that opinion in the audit report. The standard outlines the structure and content of the audit report to ensure transparency and clarity.
2. Forming an Opinion:
The auditor forms an opinion on whether the financial statements are presented fairly in all material respects and in accordance with the applicable financial reporting framework (e.g., IFRS or Bangladesh Financial Reporting Standards).
The opinion is based on the evidence obtained during the audit process. The auditor assesses whether the financial statements are free from material misstatement, whether due to fraud or error.
3. Types of Audit Opinions:
Unqualified Opinion (Clean Opinion):
This is given when the auditor concludes that the financial statements provide a true and fair view, without any material misstatements, and are in compliance with the applicable financial reporting framework.
Qualified Opinion:
If there are specific material misstatements or limitations on the scope of the audit that are not pervasive, a qualified opinion is issued.
Adverse Opinion:
This is issued when the financial statements are materially misstated and do not present a true and fair view.
Disclaimer of Opinion:
If the auditor is unable to obtain sufficient audit evidence and cannot form an opinion, they issue a disclaimer of opinion.
4. Audit Report Structure:
Title: The report should have an appropriate title that indicates its purpose.
Addressee: The report should be addressed to those charged with governance or the appropriate stakeholders.
Opinion Paragraph: The auditor’s opinion on the financial statements, stating whether they present a true and fair view.
Basis for Opinion: A description of the key audit procedures performed and a statement that the auditor has obtained sufficient appropriate audit evidence to support their opinion.
Key Audit Matters (if applicable):
For listed companies and certain other entities, the auditor may include key audit matters that highlight areas of significant judgment or risk.
Responsibilities of Management:
A statement explaining that management is responsible for the preparation of the financial statements.
Auditor’s Responsibility:
A description of the auditor's responsibility to express an opinion on the financial statements based on the audit.
Other Information:
The auditor may also comment on other information, such as the management’s report, if it is inconsistent with the audited financial statements.
5. Communication with Those Charged with Governance:
The auditor must communicate the audit opinion and any significant matters that arose during the audit to those charged with governance, especially if there are concerns or disagreements about the financial statements.
6. Considerations for Modifying the Opinion:
If the auditor concludes that the financial statements contain a material misstatement, or if they cannot obtain sufficient appropriate audit evidence, they modify their opinion accordingly.
The auditor must evaluate the pervasiveness of any misstatements or limitations before deciding whether to issue a qualified, adverse, or disclaimer opinion.
7. Documentation:
The auditor must document the basis for the audit opinion and the audit procedures performed, particularly in the case of modified opinions.
In summary, BSA 700 focuses on the auditor's responsibility to form and express an opinion on the financial statements, based on the audit evidence obtained. It provides a detailed structure for the audit report, ensuring that the audit opinion is clearly communicated and that any issues arising during the audit are appropriately disclosed.