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| Bangladesh Standard on Audit(BSA-501) |
What is the Bangladesh standard on Audit-BSA-501? Describes in details:
BSA 501: Audit Evidence — Additional Considerations for Specific Items is part of the Bangladesh Standards on Auditing (BSA), which align closely with the International Standards on Auditing (ISA). BSA 501 specifically provides guidance on obtaining sufficient appropriate audit evidence for specific items in the financial statements.
Key Points of BSA 501:
1. Focus on Specific Areas:
BSA 501 highlights situations where the auditor must gather more detailed audit evidence for particular items or classes of transactions, account balances, or disclosures.
2. Examples of Specific Items:
Inventory:
When auditors are auditing inventory, they may need to perform additional procedures, such as observing physical inventory counts, testing inventory valuation methods, and ensuring inventory is properly recorded.
Confirmations:
This includes using external confirmations (e.g., bank confirmations, receivables) to gather evidence on account balances or transactions.
Related-party Transactions:
These transactions require more detailed procedures due to their inherent risk of being misreported or not disclosed accurately.
3. Audit Procedures:
The standard outlines additional audit procedures like inspecting records, obtaining confirmations from third parties, observing physical counts, and using analytical procedures.
4. Risk Assessment:
The auditor is required to assess the risk of material misstatement specific to these items and design procedures that provide sufficient appropriate evidence to address the identified risks.
In essence, BSA 501 ensures that auditors apply more rigorous evidence-gathering procedures for specific areas where the risk of material misstatement is higher, helping to increase the reliability of financial statement audits.