I have completed my project work and would like to submit my report on "Audit Procedure. This is to confirm that Mohtasim Fuad Taky, ID has successfully submitted the report on the topic "Audit Procedure and Risk in Bangladesh" as part of the program BBA, Department of Accounting Information System (AIS), United International University I would like to express my gratitude to Allah for giving me the ability and dedication to complete this paper "Audit Procedure and Risk in Bangladesh" on time.
Finally, I would like to express my gratitude to my parents for their unwavering love, support and sacrifices, without which I could not have achieved so much. In Bangladesh's changing environment, it is much more important to identify and reduce audit risks. This article explores the nuances of audit risk in the Bangladeshi setting, examines the key variables that influence its frequency, identifies the many types of risks that arise in local audits, and proposes practical approaches to risk reduction.
Introduction
- Background of the Study
- Origin of the Report
- Objectives of the Study
- Scope of the Study
- Significance of the Study
- Methodology of the Study
- Limitations of the Study
The primary purpose of this project report is to describe the steps involved in performing an audit method and the risks involved. The purpose of this research is to thoroughly investigate how well audit processes reduce risks in Bangladesh's dynamic financial environment. Analyze the most common audit procedures used by Bangladeshi organizations, covering both classical and current approaches.
This research is valuable to a number of stakeholders as it carefully examines the effectiveness of current control methods in mitigating these risks. The ultimate goal of this study is to strengthen the financial ecosystem of Bangladesh and make it more reliable and robust. Careful interpretation of quantitative data may be necessary due to potential limitations of selected statistical techniques or the design of research instruments.
Literature Review
The effectiveness of audit processes is also significantly shaped by the governance and regulatory framework. The Comptroller and Auditor General (CAG) of Bangladesh has published the Bangladesh Government Auditing Standards, which provide the basis for auditing government organizations and guarantee accountability and compliance with relevant laws (Comptroller and Auditor General of Bangladesh, n.d.). In addition, the overall caliber and legitimacy of the accountancy profession in Bangladesh is enhanced by ICAB's involvement in establishing professional standards and ethical principles for accountants (Institute of Chartered Accountants of Bangladesh, n.d.).
The International Federation of Accountants (IFAC) has issued statements, such as the International Auditing and Assurance Standards Board (IAASB), that serve as a global standard for auditing practices and further facilitate alignment with international best practices (International Federation of Accountants, n.d.) . The effectiveness of audit processes in minimizing contemporary risks is however hindered by a number of issues, regardless of the infrastructure in place. There are new problems for auditors in identifying and assessing associated risks as a result of the financial sector's growing embrace of technologies such as blockchain and artificial intelligence (Kumar & Kar, 2022).
It is necessary to improve audit processes to identify and stop cyber-attacks that could compromise financial information due to the growing sophistication of cyber security risks (KPMG, 2023). The Institute of Chartered Accountants of Bangladesh (2023) states that the constantly changing regulatory environment, including new rules regarding corporate governance and accounting standards, requires continuous changes to auditing procedures. First, there are not enough empirical studies looking at how well certain audit techniques work in Bangladesh to reduce risks that have been detected.
Second, we still have a lot to learn about how new technologies and cyber threats affect audit processes and risk assessment. Finally, a thorough examination of industry-specific hazards and tailored audit methodologies for various sectors of Bangladesh's heterogeneous economy is provided. 9 | The site and reviewers can gather a range of viewpoints and help shape proposals that are tailored to the unique environment.
By addressing these shortcomings and continuously adapting to the dynamic risk environment, Bangladesh can strengthen its audit procedures and cultivate a more robust and reliable financial system, thus paving the way for sustained economic expansion and prosperity.
Theoretical Framework
- Introduction
- Theoretical Discussion
- Auditing and Accounting Differences
- Requirements of an Effective Audit
- Types of Audits
- Generally Accepted Auditing Standards (GAAS)
- General standards
- Standards of Field-Work
- Standards of Reporting
- Audit Procedure
Properly maintained audit documentation provides transparency in the audit process and acts as a reference for future audits. For users of financial statements to feel confident that the audit has been carried out impartially, independence is essential. As emphasized by Generally Accepted Auditing Standards (GAAS), auditors must possess specific qualities in order to maintain the integrity and reliability of the audit process.
The fieldwork standards guide the auditor's practical journey through the audit process within the full framework of Generally Accepted Auditing Standards (GAAS). It is imperative that the auditor obtain a thorough understanding of the client's business, industry and internal controls before examining the financial information. The effectiveness of the client's internal control system must be assessed to decide how much the auditor can rely on them and to adjust audit processes going forward.
Evaluating the results of the audit: After collecting and reviewing the data, the auditor must determine whether it is sufficient and appropriate to draw conclusions about the financial statements. Forming an audit opinion: Based on the collected information and analysis, the auditor decides on the fairness of the financial statements. Planning: In order to ensure that the client is fully aware of potential hazards before entering the processes, GAAS suggests starting the audit with extensive preparation.
It also highlights how management is responsible for a fair presentation of the financial statements. Audit operations must be adequately planned and controlled in order to be carried out effectively. A description of the procedures to be followed during an audit can be found in the audit programme.
Inherent risk assessment: The auditor determines whether there is a possibility of material misstatement of the account balances before assessing the effectiveness of the client's internal control. The risk may increase or decrease depending on the auditor's ability to detect fraud and the specifics of the company and its industry. In-depth knowledge of the client's internal control enables the auditor to identify potential areas of misstatement and factors that could affect the risk of material misstatement.
Audit Procedure in Bangladesh
Regular Audit Practice in Bangladesh
Audit Process by ICAB
- Planning
25 | P a g e One of the numerous tenets of the International Principles of Auditing, ISA 300, specifies that an audit method must be appropriately prepared. The standard recording of the client's planning notes is emphasized by BSA as crucial. Based on the combined audit expertise and experience of the auditor, the planning document is developed to comply with the audit method.
26 | P a g e Inherent Risk and Control Risk Assessment: Accountants assess inherent risk by considering the vulnerability of the financial statements to material misstatement, without considering internal controls. Fraud risk: Accountants assess the risk of fraud in light of the potential impact on financial accounts, taking into account variables such as management incentives, opportunities and attitudes. Risk assessment procedures: To obtain information and improve their understanding of the business and its risks, auditors use risk assessment techniques, such as analytical processes, questioning and observation.
Accountants record how well they understand the client's business, the risks identified and the reasoning behind the evaluation. The size of the entity, the type of financial information and the industry all influence the choice. Documentation of materiality: Accountants record their materiality determinations, including the benchmarks selected, the reasoning behind the choices, and the overall impact on the financial statements, in a manner similar to risk assessment.
A lower materiality requirement may be appropriate for high risk areas due to the greater potential impact on financial statements. Based on the risk and materiality assessments, auditors modify their audit strategy to better address areas of greater inherent and control risks. In summary, a thorough assessment of risk and materiality in the planning phase is essential for a strong audit procedure.
It helps auditors to focus on important areas, adjust processes accordingly and ensure that the audit is carried out efficiently and with due care.
Collection of Audit Evidence
- Audit Sampling
- Controlling and Recording
- Vouching the Total Population
- Accountancy Work and Audit Testing
- Review and Opinion
APM states that the following are justifications for testing controls: To evaluate implementation and design. 29 | The site is based on well-chosen chapters, allowing you to get a sense of the whole story without having to read every word. This efficient method provides a decent level of assurance about the correctness of the data, while saving a lot of time and money.
But two critical elements are needed for audit sampling to be successful: careful sample selection and expert interpretation of the data. Selecting the right sample ensures that the results are representative, and correctly interpreting the results requires taking into account possible sampling errors and how they can influence the final conclusions. To determine the effect that errors have on the population as a whole, they must be assessed and assessed as they are discovered during the audit.
Identified audit deficiencies should be evaluated to determine how they may affect the general public. The selection table lists the parameters that determine the safety factor; the criteria in the balance sheet and the income statement are different. At this point, management and auditors discuss the audit results and the report.
After the conversation, the firm's managing partner assesses the audit as a whole and gives an opinion. How well the answers satisfied the audit team will determine the final conclusion released. If the responses are deemed adequate, an unqualified opinion is issued by the audit team; otherwise an opinion is formed that is not qualified.
The tests that were performed and the summary sheet should be used to determine the conclusion.
Audit Procedure in Bangladesh
Factors Influencing Audit Risk in Bangladesh
Specific Types of Audit Risk in Bangladesh
Strategies for Mitigating Audit Risk in Bangladesh
34 | Page on the company's control environment and catch any problems before they become serious misstatements. To adequately overcome certain obstacles and fulfill their professional responsibilities, auditors must have a thorough knowledge of the Bangladeshi environment, including relevant rules, industry-specific hazards, and standard accounting standards.
Findings, Recommendation and Conclusion
Findings
Recommendation
Conclusion
