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| Bangladesh Standard on Audit(BSA-250) |
What is the Bangladesh standard on Audit(BSA-250) ? describes in details:
BSA-250: Consideration of Laws and Regulations in an Audit of Financial Statements is a standard issued by the Institute of Chartered Accountants of Bangladesh (ICAB). It provides guidelines for auditors on how to consider the impact of laws and regulations when performing an audit of financial statements.
In short, BSA-250 addresses the following key points:
1.Responsibility of the Auditor:
The auditor is responsible for obtaining reasonable assurance that the financial statements are free from material misstatement, whether due to non-compliance with laws and regulations or errors. However, the auditor is not responsible for preventing non-compliance with laws and regulations.
2.Understanding Applicable Laws and Regulations:
The auditor must have an understanding of the laws and regulations that are relevant to the entity being audited. This includes legal requirements related to the financial reporting framework, industry-specific regulations, and tax laws, among others.
3.Identifying Non-Compliance:
The auditor should remain alert for any indications of non-compliance with laws and regulations during the course of the audit. This could include issues such as violations of tax laws, environmental regulations, or securities laws.
4.Responsibility to Report Non-Compliance:
If the auditor identifies or suspects non-compliance with laws and regulations, they must communicate it to those charged with governance (e.g., the board of directors or audit committee). In some cases, the auditor may need to consider reporting non-compliance to external parties, such as regulators, if required by law.
5.Impact on Audit Opinion:
If non-compliance with laws and regulations results in material misstatements in the financial statements that are not corrected by management, the auditor may need to modify the audit opinion.
6.Consideration of Internal Controls:
The auditor should evaluate whether the entity's internal controls are designed to ensure compliance with applicable laws and regulations. If internal controls are weak or ineffective, the auditor may need to perform additional procedures.
7.Documentation:
The auditor must document the procedures performed, evidence obtained, and conclusions reached regarding the consideration of laws and regulations during the audit.
In summary, BSA-250 emphasizes the importance of understanding and considering relevant laws and regulations during the audit process. The auditor is expected to identify potential non-compliance, report it to the appropriate parties, and ensure that it is reflected in the audit conclusions and opinion when necessary.