They opined this in the webinar on “Financial Reporting Act-2015: its implications on the business houses” organized by Dhaka Chamber of Commerce & Industry (DCCI).

They also said good financial reporting will help attract FDI and create business confidence.

As the chief guest in the programme, Mohammad Muslim Chowdhury, Comptroller and Auditor General of Bangladesh said Financial Reporting Act (FRA) covers the compulsion of public interest entity besides financial courses.

“We need more accounting professionals in the country. FRC needs to improve the visibility and for that it can collaborate with Bangladesh Bank, BSEC, Ministry of Finance or other regulatory body. In the next 4 to 5 years FRC should play a role of persuasion rather than imposition,’ he suggested.

Regarding adopting IFRS, it should be based on as per our country context considering cost of compliance, moreover, IFRS is not applicable for SMEs of Bangladesh right at this moment. For improvement of corporate governance in the small business houses or SMEs, FRC can play its motivating role, he added.

Muslim Chowdhury also reminded the wave of 4th industrial revolution and requested the institutions like ICAB and ICMAB to collaborate with FRC to enhance management information system and corporate governance in next 10 years of time.

AftabUl Islam, FCA, Director of Bangladesh Bank and also former President of DCCI said for audit firms, there may have a rating system like camel rating.

He said better financial reporting will help attract FDI and create business confidence. “We have to enhance our credibility and in that case we can examine the successful examples of other countries in terms of financial reporting regulations,” he added.

Mohammad Mohiuddin Ahmed, Executive Director of Financial Report Monitoring Division, Financial Reporting Council, Bangladesh presented the keynote paper.

He said there are three implications of financial reporting act on the business houses like financial statement, audit process and accountability.

Good financial reports will make businesses comparable globally and create investors’ confidence and ensure high ethical values, he said.

Without maintaining international accounting standard (IAS) or international financial reporting standard (IFRS), the financial report will not be accepted locally or internationally. Establishment of Financial Reporting Council (FRC) is a positive effort and the corporates need to change their mindset as well, he added.

He also emphasized on creating more competent professional accountants in the country. We also should conduct a GAP analysis in order for preparation and presentation of financial statements.

Dr. Javed Siddiqui, Associate Professor at University of Manchester, UK said FRC has been given much authority and it should act to maintain a transparent financial reporting by the auditors. Auditor’s fee in Bangladesh is low compared to other countries.

FRC needs to increase it visibility through their regular activities. For a credible audit report, for local or international acceptance, corporate governance and positive will of company management are key factors, he mentioned.

Barrister A M Masum, Appellate Division, Supreme Court of Bangladesh urged for the visibility enhancement of FRC. FRC being a regulator has to make the public interest entities to abide by the regulations. Besides strengthening auditors, he also emphasized strengthening management and board of a company that FRC can look into it according to section 47, he added.To secure public interest, section 71 of financial reporting act allows FRC to create necessary regulations to gain confidence.

Muhammad Farooq, FCA, President of the Institute of Chartered Accountants of Bangladesh (ICAB) said FRC should play a role of regulators of the regulators.

“Financial reports are being prepared by the company and upon that report the audit report is prepared by the auditors. If any anomalies found, not only auditors are to be blamed, but the management of the company should also be accountable for that.”

He said in the banking sector in Bangladesh we don’t see implementation of IFRS. Moreover, auditors’ enlistment should be under one body.

Md. Jasim Uddin Akond, FCMA, President of the Institute of Cost & Management Accountants of Bangladesh (ICMAB) suggested to include cost audit in the FRA and requested FRC to take initiative for this.

CQK Mustaq Ahmed, Former Chairman of FRC said that FRC’s supervisory role should be strengthened.

Regarding fixing threshold (at present the threshold for private company is - revenue more than 5 crore taka yearly, at least 50 employee and property of 3 crore taka are considered as public interest entity) for public interest entity for SME sector, he said.

“FRC may have a consultation with the SME stakeholders to fix it up. FRC is now in its take off situation and slowly it will be able to enhance its visibility,” he added.

DCCI President Shams Mahmud said Financial Reporting Council (FRC) needs to play more effective role for improvement of quality of audit and corporate financial reporting systems significantly which will consequently help address the willful default loan problem in the banking sector. Capital market in Bangladesh is underdeveloped and its market capitalization to GDP is one of the lowest in the world.

“Transparent financial reporting by all listed companies as a well as non-listed company is very critical to gain investors' confidence thereby attract investment in the capital market.”

To attract foreign investment, MSME reporting also needs to meet international requirements and standards such as those set by the International Accounting Standards Board.Simple, user-friendly accounting and financial reporting guidelines for MSMEs need to be in place to ensure better access to finance. FRC needs to have more professional resources for implantation of this Act, he added.

M Anwarul Karim, Executive Director of Standard Setting Division, Financial Reporting Council, Bangladesh; Md Abdul Kader Joaddar, CFO, SCB Akter Hossain Sannamat, CEO, Omera Fuels Limited and Dr. Sharif Ahkam, Faculty, North South University took part in the discussion.

Also read: DCCI opens ‘SME Development Department’ to facilitate CMSME sector