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Basic Principles Governing an Audit

B.S.A 200 Objectives and general principal governing an audit of financial statements: These principles have to satisfy the objectives of the audit which is to enable the auditor to express an opinion whether the financial statements are prepared an all material respects, in accordance with an identified financial reporting framework (BAS). The phrases used to express the auditors opinion are give a true and fair view or present fairly in all material respects which are equivalent terms. Although the auditors opinion enhances the credibility of the financial statements, the user cannot assume that the opinion is an assurance as to the future viability of the entity nor the efficiency or effectiveness with which management has conducted the affaires of the entity. The auditor should comply with the Code of Ethics for Professional Accountants issued by the IFAC. Ethical principles governing the auditors professional responsibilities are: Basic Principals: Independence Integrity Objectivity Professional Competence and due care Confidentiality Professional behavior; and Technical standards The auditor should conduct an audit in accordance with International Standards on Auditing. The auditor should plan and perform the audit with an attitude of professional skepticism recognizing that circumstances may exist which cause the financial statements to be materially misstated. For example, the auditor would ordinarily expect to find evidence to support management representations and not assume they are necessarily correct.

Ethical Guidelines and Technical Standards


As defined in the IFAC Code of Ethics, professional accountants means those persons, whether they may be in public practice, industry, commerce, the public sector or education, who are members of an IFAC member body. An IFAC member body is usually a national professional accounting institute like the ICAB. The ICAB has its own ethical standards. Professional misconduct in relation to chartered accountants in practice Professional misconduct in relation to members of the Institute in service Code of ethics for Management consultancy Mechanical Accounting or Computer Services

Financial Statements and Accounting policies


International Accounting Standards (IAS) 1, Presentation of financial statements sets out overall considerations for the presentation of financial statements, guidelines for their structure and minimum requirements for the content of financial statements. Financial statements are usually referred to as the ultimate outputs of accounting process and financial reporting is done through the presentation of these financial statements in compliance with IASs. IASs have been adopted in Bangladesh as BAS. General purpose financial statements are: Those intended to meet the needs of users who are not in a position to demand reports tailored to meet their specific information needs. Those which include that are presented separately or within another public document such as an annual report or a prospectus. Objectives or financial statements include: Provide information about the financial position, performance and changes in financial position of an enterprise that is useful to a wide range of users in making economic decisions: and To show the results of the stewardship of management or the accountability of management for the resources entrusted to it. Components of Financial Statements A) Balance sheet B) Income Statement C) a statement of showing either, all changes in the equity or changes in equity other than those arising from capital transactions with owner and distribution of owner D) Cash Flow Statement E) Accounting Policies and Explanatory Notes.

Accounting Policies
Accounting policies are defined as the principles, bases, conventions, rules and procedures adopted by the management in preparing financial statements requires inter alia: 1. Selecting and applying accounting policies according to paragraph 20 (IAS-1) under which: It requires ensuring financial statements comply with all the requirements of each applicable BAS and Standard Interpretation Committee (SIC) interpretation, Where there is no specific requirement, accounting policies should be developed to ensure that financial statement provide information that is relevant to the decision making needs of users: and reliable. 2. Presenting information, including accounting policies in a manner which provides relevant, reliable, comparable and understandable information. The accounting policies that an enterprise might consider presenting include, but not restricted to the following: Revenue recognition Consolidation policies Business combination Joint ventures Recognition of depreciation/amortization of tangible and intangible assets Capitalization of borrowing costs and other expenditure Construction contracts Investment properties Leases Research and development costs Inventories Taxes Provisions Employee benefits Foreign currency translation and hedging Segment reporting Cash and cash equivalent Inflation accounting; and Government grants

Other B.A.Ss specially require disclosure of accounting policies in many of these areas. Bangladesh Accounting Standards-BAS Adoption status up to June 2010 BAS-1 Presentation of Financial Statements BAS-2 BAS-7 BAS-8 BAS-10 BAS-11 BAS-12 BAS-14 BAS-16 BAS-17 BAS-18 BAS-19 BAS-20 BAS-21 BAS-22 BAS-23 BAS-24 BAS-25 BAS-26 BAS-27 BAS-28 BAS-30 BAS-31 BAS-33 BAS-34 BAS-36 BAS-37 BAS-38 BAS-40 BAS-41 BFRS-2 BFRS-3 BFRS-5 BFRS-6 Inventories Cash Flow Statements Accounting Policies, Changes in Accounting Estimates and Errors Events after the Balance Sheet Date Construction Contracts Income Tax Segment Reporting Property, Plant and Equipment Leases Revenue Employee Benefits Accounting for Government Grants and Disclosure in the Government Assistance The Effects of Changes in Foreign Exchange Rates Business Combination Borrowing Costs Related Party Disclosure Accounting for Investments Accounting and Reporting by Retirement Benefit Plans Consolidated and Separate Financial Statements Investments in Associates Disclosure in Financial statements of Banking and Similar Financial Institutions Interest in Joint Ventures Earnings per Share Interim Financial Reporting Impairment of Assets Provisions, Contingent Liabilities and Contingent Assets Intangible Asses Investment Property Agriculture Share-based-Payment Business Combinations Non-current Assets held for Sale and Discontinued Operations Exploration for Evaluation of Mineral Resources