Chairman of the Financial Reporting Council (FRC) Professor Hamid Ullah Bhuiyan has said no bank in the country follows International Accounting Standards or International Financial Reporting Standards (IFRS) in preparing financial statements.
Due to this, the actual picture of the financial health of the banks does not come out in the financial reports. If IFRS is followed, it will reduce banks' assets by 40 percent, he said.
Prof Hamid said this while speaking as chief guest at a ‘Meet the Press’ organized by Capital Market Journalists Forum (CMJF), an organization of stock market reporters, held in the capital on Monday.
He said, "We want IFRS to be implemented, then the real financial information of the bank will appear in the financial statements."
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The FRC chairman said the outstanding debt is being dragged on for years. It is being rescheduled paying 2 percent only. But with this 2 percent interest income or principal does not return to the bank.
But regularly these types of loans are rescheduled. This is being done so that defaulters can take loans from other banks, he pointed out.
He emphasized coming out from this culture for the sake of the country’s financial sector.
Prof Hamid said many manipulations are done in the capital market using financial statements.
“Many weak companies go through initial public offerings or IPOs. Most of the time, there are three consecutive years of increasing profits prior to the IPO. But after the IPO, profits fell consistently,” he pointed out.
The FRC chairman said the initiative to register auditors had been taken to ensure transparency in the audit of financial statements of listed companies. It will be completed in a few months. Henceforth no auditor not registered with the FRC can audit a company listed on the capital market.
He also said that if a company has a revenue of Tk50 crore or more, that company will be considered a public interest company. There are about 3,400 such companies in the country. Apart from this, there are 2500 micro-credit institutions. These will also come under FRC.
CMJF president Ziaur Rahman presided over while Secretary Abu Ali moderated the function.