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| Bangladesh Standard on Audit(BSA-330) |
What is the Bangladesh standard on Audit(BSA-330)? describes in details:
BSA-330: The Auditor's Responses to Assessed Risks is a standard issued by the Institute of Chartered Accountants of Bangladesh (ICAB). It provides guidelines on how auditors should respond to the risks of material misstatement that have been identified and assessed during the audit planning process.
In short, BSA-330 addresses the following key points:
1.Objective:
The main objective of BSA-330 is to ensure that the auditor designs and performs audit procedures that are responsive to the assessed risks of material misstatement, whether due to fraud or error, identified during the risk assessment phase.
2.Nature, Timing, and Extent of Procedures:
The auditor must design and perform audit procedures that address the identified risks at the assertion level. These procedures should vary in nature, timing, and extent depending on the level of assessed risk. For higher risks, the auditor may need to perform more extensive or detailed procedures.
3.Tests of Controls and Substantive Procedures:
The auditor's response may include a combination of:
Tests of Controls:
Procedures to evaluate the operating effectiveness of internal controls that are designed to prevent or detect misstatements.
Substantive Procedures:
Detailed procedures to detect material misstatements at the financial statement or assertion level, such as testing transactions or examining supporting documentation.
4.Further Responses to Identified Risks:
If the auditor assesses a risk as significant, additional procedures may be necessary, such as obtaining more audit evidence or enhancing the scope of testing. The auditor should consider the possibility of fraud and design procedures to detect it.
5.Use of Audit Evidence:
The auditor must gather sufficient and appropriate audit evidence to support their conclusions regarding the risks. The procedures should ensure that the evidence is relevant, reliable, and obtained from multiple sources when necessary.
6.Reassessment of Risks:
The auditor should continuously assess and reassess the risks throughout the audit process. If new risks or changes to the assessed risks arise, the auditor should modify their responses accordingly.
7.Documentation:
The auditor is required to document the audit procedures performed in response to the assessed risks, including the rationale for the nature, timing, and extent of the procedures, and how these responses address the risks.
In summary, BSA-330 emphasizes the importance of designing audit procedures that directly respond to the risks identified during the risk assessment process. It ensures that the auditor’s approach is tailored to the specific risks and provides a framework for obtaining sufficient and appropriate audit evidence to support the audit opinion.