Bangladesh
Standard on Audit(BSA-580)
What is the Bangladesh standard on Audit-BSA-580? Describes in details:
Bangladesh Standard on Auditing (BSA) 580, titled "Written Representations", provides guidance on the use of written representations obtained from management and those charged with governance during the audit process. Written representations are statements made by management to confirm certain matters related to the financial statements and the audit.
Here are the key points of BSA 580:
1.Objective:
The primary objective of BSA 580 is to establish the auditor's responsibility regarding obtaining written representations from management, which serve as evidence to support the audit conclusions and to corroborate audit evidence obtained from other sources.
2.Management’s Responsibility:
Management is responsible for the preparation and fair presentation of the financial statements, and for providing the auditor with all necessary information and explanations.
Management must provide written representations to the auditor confirming certain matters, including the accuracy and completeness of the information provided.
2.Auditor’s Responsibilities:
The auditor should obtain written representations from management and those charged with governance to support the audit evidence and conclusions.
The auditor should assess the reliability of written representations in light of the audit evidence obtained during the audit. These representations should not be used as a substitute for audit procedures but as corroborative evidence.
3.Key Matters for Written Representations:
Completeness of Information: Management's assertion that all relevant financial information has been provided to the auditor.
Accuracy of Financial Statements: Confirmation from management that the financial statements are free from material misstatement.
Compliance with Laws and Regulations: Management’s confirmation of compliance with laws, regulations, and contractual obligations that may impact the financial statements.
Unadjusted Misstatements: Confirmation that all unadjusted misstatements that are not material have been identified.
Estimates and Judgments: Confirmation regarding the reasonableness of accounting estimates made by management.
4.Limitations of Written Representations:
Written representations are not a substitute for other audit procedures. They cannot replace audit evidence obtained from other sources, such as physical verification or third-party confirmations.
The auditor should not rely solely on written representations to form their opinion, particularly if other audit evidence suggests that the representations may not be reliable.
5.Content of Written Representations:
The written representation should be specific, covering various aspects such as the accuracy of the financial statements, completeness of transactions, and assumptions underlying estimates.
The auditor may issue a management representation letter to formalize the written representations from management.
6.Management’s Refusal to Provide Written Representations:
If management refuses to provide a written representation, the auditor must assess the impact on the audit. The auditor may need to modify the audit opinion or disclaim an opinion if the refusal prevents the auditor from obtaining sufficient appropriate audit evidence.
7.Documentation:
The auditor must document the written representations obtained and evaluate the implications if the representations are inconsistent with other audit evidence.
In summary, BSA 580 outlines the importance of obtaining written representations from management to support the audit process. These representations serve as additional evidence for the auditor but are not a substitute for other audit procedures. The standard ensures that the auditor gathers sufficient appropriate evidence to form an opinion on the financial statements.