Financial Reporting Council (FRC) needs to play a more effective role for improvement of quality of audit and corporate financial reporting systems significantly which will consequently help address the wilful default loan problem in the banking sector, experts said in a webinar on Saturday.
Experts also pointed out that in the context of increasing digitalization, compliance to accounting standards and fair and transparent financial reporting is essential.
The webinar styled on “Financial Reporting Act-2015: its implications on the business houses” organised by Dhaka Chamber of Commerce & Industry (DCCI).
Mohammad Muslim Chowdhury, Comptroller and Auditor General of Bangladesh joined the webinar as the chief guest. Aftab-Ul Islam, FCA, Director, Bangladesh Bank joined as guest of honour. DCCI President Shams Mahmud chaired the webinar.
DCCI President Shams Mahmud said the 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 well as non-listed companies is very critical to gain investors' confidence thereby attracting 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.
Mr Mohammad Muslim Chowdhury said the Financial Reporting Act (FRA) covers the compulsion of public interest entity besides financial courses. We need more accounting professionals in the country, he said. FRC needs to improve its 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, Mr Mohammad added.
Mr Aftab Ul Islam 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.
Mohammad Mohiuddin Ahmed, FCA, ACA (E&W), Executive Director, 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, Mohiuddin insisted.
Mr M Anwarul Karim, FCA, CPA (USA), CFE, Executive Director, Standard Setting Division, Financial Reporting Council, Bangladesh said that the FRC focuses on strengthening the financial reporting of business houses.
Dr Javed Siddiqui, Associate Professor, University of Manchester, UK said FRC has been given much authority and it should act to maintain transparent financial reporting by the auditors. Auditor’s fee in Bangladesh is low compared to other countries, he said.
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.
Mr Muhammad Farooq, FCA, President, The Institute of Chartered Accountants of Bangladesh (ICAB) said FRC should play a role of regulators of the regulators.
Md Jasim Uddin Akond, FCMA, President, 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, Financial Reporting Council said that FRC’s supervisory role should be strengthened.
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 open discussion session.
DCCI Senior Vice President N K A Mobin, FCA, FCS gave the concluding remarks.