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| Bangladesh Standard on Audit(BSA-500) |
What is the Bangladesh standard on Audit(BSA-500)? describes in details:
BSA-500: Audit Evidence is a standard issued by the Institute of Chartered Accountants of Bangladesh (ICAB). It provides guidance on the auditor’s responsibility to obtain sufficient and appropriate audit evidence to form a basis for their audit opinion on the financial statements.
In short, BSA-500 addresses the following key points:
1.Objective of Audit Evidence:
The auditor must obtain sufficient and appropriate audit evidence to provide a reasonable basis for their opinion on the financial statements. This evidence helps the auditor assess whether the financial statements are free from material misstatement, whether due to fraud or error.
2.Sufficiency and Appropriateness of Evidence:
Sufficiency:
The quantity of audit evidence needed to support the audit opinion. This is influenced by the assessed risks of material misstatement and the quality of the audit evidence obtained.
Appropriateness:
The relevance and reliability of the audit evidence. Evidence must be both relevant to the audit objectives and reliable enough to support the conclusions drawn.
3.Types of Audit Evidence:
Audit evidence can come from various sources, including:
Physical Examination: Inspecting tangible assets.
Documentary Evidence: Reviewing financial records, contracts, and invoices.
Analytical Procedures: Analyzing financial data to identify unexpected relationships.
Confirmations: Verifying balances or transactions with third parties, such as customers or banks.
Inquiries: Obtaining oral or written information from management and others within the organization.
Observations: Watching processes or controls being performed.
4.Reliability of Evidence:
The reliability of audit evidence depends on its source and nature. Evidence obtained directly by the auditor (e.g., physical inspection or third-party confirmations) is generally more reliable than evidence obtained indirectly (e.g., from internal management).
5.Evaluating Audit Evidence:
The auditor should evaluate whether the evidence obtained is sufficient and appropriate to support the conclusions regarding the financial statements. This includes considering any contradictory or conflicting evidence.
6.Documentation:
The auditor must document the audit evidence obtained, including how the evidence supports the audit opinion. This documentation helps to demonstrate that the audit was conducted in accordance with professional standards.
7.Professional Judgment:
The auditor applies professional judgment in determining the sufficiency and appropriateness of audit evidence, considering factors like risk, materiality, and the reliability of the evidence.
In summary, BSA-500 emphasizes the importance of obtaining sufficient and appropriate audit evidence to support the auditor's opinion. The auditor must carefully assess the quality and quantity of evidence from various sources to ensure the reliability and validity of the conclusions drawn from it.