Good financial reports by business organisations including smaller ones can build investors’ confidence, making Bangladeshi businesses comparable globally, business and financial analysts told a discussion on Saturday.
In the context of increasing digitisation, they emphasised compliance with international accounting standards and fair and transparent financial reporting.
“Without international accounting standard (IAS) or international financial reporting standard (IFRS), financial reports will not be accepted locally or internationally,” Mohammad Mohiuddin Ahmed, an Executive Director at the Financial Reporting Council (FRC), noted in his keynote at the webinar on “Financial Reporting Act-2015: its implications on the business houses” organised by Dhaka Chamber of Commerce and Industry (DCCI).
He underlined the need for changing mindset of the corporates and creating more competent professional accountants in order to improve the situation.
DCCI President Shams Mahmud stressed on proactive role of the FRC in improving quality of audit and corporate financial reporting system, which he felt, would help address willful default loan issue in the banking sector.
“Transparent financial reporting by all listed companies as a well as non-listed company is very critical to gaining investors' confidence and thus attract investment in the capital market,” he said adding that for attracting foreign investment, reporting by micro, small and medium enterprises’ (MSMEs’) also needs to meet international requirements.
Comptroller and Auditor General of Bangladesh Mohammad Muslim Chowdhury said the FRC needs to increase visibility, suggesting that it can collaborate with the Bangladesh Bank, Bangladesh Securities and Exchange Commission (BSEC), and the Ministry of Finance.
He observed that the FRC has the scope to persuade businesses the next 4-5 years, instead of imposing decisions, to improve reporting standard. He added that the cost of compliance and country context should also be taken into consideration.
Aftab Ul Islam, a Director at the Bangladesh Bank and former DCCI president, pointed out that \better financial reporting would help attract foreign investment. “We’ve to enhance our credibility and in that case we can examine successful examples of other countries in terms of financial reporting regulations,” he said.
Javed Siddiqui, an Associate Professor at theUniversity of Manchester, the UK, said the FRC should act to maintain a transparent financial reporting by the auditors.“For a credible audit report, for local or international acceptance, corporate governance and positive will of the company management are key factors,” he maintained.
Institute of Chartered Accountants of Bangladesh (ICAB) President Muhammad Farooq said if anomalies are found in financial reports, not only are the auditors to be blamed, but company management should also be made accountable.
Former FRC chairman CQK Mustaq Ahmed said the FRC’s supervisory role should be strengthened.