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| Bangladesh Standard on Audit(BSA-560) |
What is the Bangladesh standard on Audit-BSA-560? Describes in details:
Bangladesh Standard on Auditing (BSA) 560, titled "Subsequent Events", provides guidance to auditors on how to address events that occur after the reporting period but before the auditor's report is issued.
Here are the key points of BSA 560:
1.Objective:
The objective of BSA 560 is to ensure that auditors identify and assess events that occur after the reporting period but before the issuance of the audit report. These events may require adjustments to the financial statements or additional disclosures.
2.Types of Subsequent Events:
Adjusting Events: These are events that provide evidence of conditions that existed at the reporting date and require adjustments to the financial statements (e.g., the settlement of a lawsuit after the reporting date that confirms the liability existed before the reporting date).
Non-Adjusting Events:
These are events that arise after the reporting date but do not affect the conditions that existed at the reporting date. These events are disclosed in the financial statements, but no adjustments are made to the figures (e.g., a major fire or natural disaster after the reporting date).
3.Audit Procedures:
The auditor should review events that occur after the reporting period and evaluate their impact on the financial statements.
The auditor performs procedures such as reviewing interim financial statements, inquiring with management, and obtaining evidence about subsequent events.
4.Management’s Responsibility:
Management is responsible for identifying and disclosing subsequent events. The auditor needs to ensure that management has appropriately considered these events and reflected them in the financial statements if required.
5.Responsibilities of the Auditor:
The auditor must obtain sufficient appropriate audit evidence regarding subsequent events, including obtaining representations from management.
If the auditor identifies subsequent events that require adjustments or disclosures in the financial statements, they should discuss these events with management and ensure proper action is taken.
If necessary, the auditor should update the audit report to reflect any impact from significant subsequent events.
6.Communication of Subsequent Events:
If a subsequent event is significant but not adjusted or disclosed properly by management, the auditor may need to modify the audit opinion (e.g., issuing a qualified opinion or an adverse opinion).
7.Documentation:
The auditor must document the procedures performed to identify subsequent events, the evidence obtained, and the conclusions drawn about their impact on the financial statements.
In summary, BSA 560 emphasizes the auditor's responsibility to identify and evaluate subsequent events that occur after the reporting period but before the audit report is issued. The standard ensures that the financial statements reflect all relevant events that affect their accuracy and completeness, providing stakeholders with reliable information.