Bangladesh
Standard on Audit(BSA-240)
What is the Bangladesh standard on Audit(BSA-240)? Describes in details:
BSA-240: The Auditor's Responsibilities Relating to Fraud in an Audit of Financial Statements is a standard issued by the Institute of Chartered Accountants of Bangladesh (ICAB). It outlines the auditor's responsibilities in relation to detecting and addressing fraud during the audit of financial statements.
In short, BSA-240 addresses the following key points:
1.Responsibility for Fraud Detection:
The auditor is responsible for designing and performing the audit to obtain reasonable assurance that the financial statements are free from material misstatement, whether due to fraud or error. However, the auditor is not responsible for detecting all fraud.
2.Identifying Risks of Fraud:
The auditor must assess the risk of material misstatement in the financial statements due to fraud. This includes considering the possibility of management fraud (such as manipulation of financial records) and employee fraud (such as theft or misappropriation of assets).
3.Professional Skepticism:
The auditor must apply professional skepticism throughout the audit, maintaining a questioning mind and being alert to signs of fraud or unusual transactions.
4.Communication with Management and Those Charged with Governance:
If fraud is detected or suspected, the auditor must communicate it to the appropriate level of management and, if necessary, to those charged with governance (e.g., the board or audit committee).
5.Consideration of Internal Controls:
The auditor should evaluate the effectiveness of the internal controls in place to prevent and detect fraud. If there are weaknesses in internal controls, this could increase the risk of fraud, requiring more extensive audit procedures.
6.Impact on Audit Opinion:
If fraud results in material misstatements in the financial statements that are not corrected by management, the auditor must modify the audit opinion accordingly.
7.Documentation:
The auditor is required to document the procedures performed, evidence gathered, and conclusions reached regarding the detection of fraud.
In essence, BSA-240 ensures that auditors are vigilant in identifying and addressing the risks of fraud during the audit process. It stresses the importance of professional skepticism, effective internal control evaluation, and proper communication with management and governance bodies when fraud is suspected or detected.