Economy passing thru critical juncture: ICAB president

The country's economy is passing through a critical juncture, struggling with both long-standing structural problems and emerging issues, Maria Howlader FCA, president of the Institute of Chartered Accountants of Bangladesh (ICAB), has said.

"Though exports and remittances have shown improvements in recent times, the continuing macroeconomic instability, high inflation, financial mismanagement, rampant corruption in the last 15 years, and the overall prevailing political uncertainty are deterring the prospects for growth and recovery," said Ms Howlader, also the managing partner and founder of Howlader Maria & Co, Chartered Accountants, in an exclusive interview with The Financial Express.

Howlader Maria & Co is a member firm of Kreston Global, which is a UK-based network of over 27,500 people in more than 150 independent accounting firms across more than 100 countries.

"...Thus, public trust and confidence in governance are waning. So, these imperative challenges now require well-coordinated strategies and overall reform initiatives that could stabilise the economy and put it on the pathway of resilient and sustainable growth," Ms Howlader said.

Responding to queries on whether she sees any visible change in financial reporting from an accounting perspective, Ms Howlader sounded positive.

"The financial reporting of corporate entities is gradually improving, but the pace of such improvement has not reached people's expectations."

The responsibility for maintaining financial records and transactions, accounting, and internal control systems lies with corporate management upon which financial statements are formatted, she added.

While preparing financial statements, businesses must ensure compliance with International Financial Reporting Standards (IFRS) and for that, they must recruit accounting professionals, she said.

Without IFRS compliance, the establishment of a good corporate culture will remain a far cry, she noted.

ICAB serves the nation by fostering and nurturing young talents for leadership through its robust education and examination system, which produces high-calibre chartered accounting professionals.

The ICAB Quality Assurance Board regularly visits the CA firms in Bangladesh to oversee their compliance initiatives.

With a view to strengthening the regulatory framework, ICAB is constantly working with the Financial Reporting Council (FRC), Bangladesh Security and Exchange Commission (BSEC), Bangladesh Bank (BB), Insurance Development and Regulatory Authority (IDRA), Microcredit Regulatory Authority (MRA), Registrar of Joint Stock Companies and Firms (RJSC), and other ministries. It is also providing support to policy-making institutions and regulators.

Moreover, ICAB is working to develop and introduce audit practice software in Bangladesh. This software will enhance the capacity of ICAB members to perform audits based on International Standards on Auditing (ISA).

This software-based audit will reduce the hassle of keeping records of audit documents. At the same time, it will shorten the duration of conventional audits and reduce the cost.

"You know that ICAB has introduced the Document Verification System (DVS) with a view to stopping manipulation and maintaining multiple versions of audited financial statements," said Ms Howlader.

This initiative is a milestone for both ICAB and the government, particularly for the revenue authorities.

DVS ensures the authenticity of audited financial statements. The organisations and entities that have memorandums of understanding (MoUs) with ICAB can verify the reports through the system before using it.

"We hope DVS will change the financial eco-system of the country in the near future. There is a widespread misconception that auditors can obtain a Document Verification Code (DVC) before conducting an audit. This is absolutely wrong," Ms Howlader said.

Only the ICAB-authorised auditors can obtain a DVC after inputting certain financial information about the companies they have audited. So, there is no possibility to generate a DVC before auditing the financial statements of a company. Without a DVC, the audited financial statements will not be considered valid, she explained.

"We all agree that corruption is the biggest obstacle to business operations. In addition, foreign exchange instability, inefficient bureaucracy, inflation, limited access to financing, frequent changes in tax policies, etc. are the other main hindrances," said Ms Howlader.

Bangladesh needs a strategic long-term plan for tax policy spanning at least 20 years to ensure consistency in tax rates for better tax planning and revenue generation, Ms Howlader noted.

"Besides, to support business growth, Bangladesh needs to build a competitive business environment to create more jobs, efficient business growth support infrastructure, and a skilled labour force, as well as to establish a policy environment that would attract private investment, improve ease of doing business, and reduce barriers to business, such as high taxes and transportation issues," she said.

Additionally, the country should focus on forex reserve protection, opening up more opportunities for overseas employment, and properly channelling remittances to stabilise the economy, she added.

Ms Howlader is also the secretary general of the Japan-Bangladesh Chamber of Commerce and Industry (JBCCI) and has been on its board of directors for the last two consecutive terms.

In addition to her many roles, she is working on a project on the development and implementation of audit practice software for CA firms in Bangladesh.

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