2003年-世界发展银行全球_Bangladesh___Accounting_and_Auditing_16页_493kb

Summary of the Report on the Observance of Standards and Codes (ROSC) in Bangladesh

Core Content

This report assesses the current state of accounting and auditing practices in Bangladesh within the context of its institutional framework and capacity. It identifies institutional weaknesses, challenges in professional education, and inconsistencies in the application of international accounting and auditing standards.

Main Issues Identified

• Institutional Weaknesses:

  • The regulatory and enforcement mechanisms for accounting and auditing standards are inadequate.
  • There is a lack of clarity and consistency in statutory requirements for financial disclosures.
  • The Companies Act 1994 and other sector-specific laws are not fully aligned with IAS and ISA.
  • The Bangladesh Securities and Exchange Commission (SEC) and Bangladesh Bank lack sufficient capacity to monitor and enforce compliance with financial reporting standards.
  • The Chief Controller of Insurance under the Insurance Act 1938 does not effectively enforce compliance with IAS.

• Professional Challenges:

  • The Institute of Chartered Accountants of Bangladesh (ICAB) lacks the capacity to ensure quality assurance and continuous professional development for its members.
  • The profession is not viewed as a prestigious career path, leading to a lack of qualified professionals.
  • Many students who pass the CA qualification are not well-prepared for the practical application of IAS and ISA.
  • There is a significant number of "CA Course Complete" (CC) accountants, who are not fully qualified, and are often employed in corporate settings.
  • The code of ethics for professional accountants is outdated and needs alignment with the IFAC Code of Ethics.

• Education and Training Deficiencies:

  • The curriculum in higher education institutions does not include sufficient content on IAS and ISA.
  • There is a shortage of qualified instructors to teach these standards.
  • Prequalification training and examination materials are outdated and not aligned with international standards.
  • Continuing professional education (CPE) is insufficient, with only 12–10 hours required annually, far below the international benchmark of 30 hours.

• Compliance with Standards:

  • Financial statements of companies in Bangladesh do not consistently follow IAS.
  • There are significant gaps in compliance with key IAS requirements, such as consolidated financial statements, statement of changes in equity, segment reporting, revenue recognition, and disclosure of related party transactions.
  • The practice of capitalizing foreign exchange rate changes and not expensing them is common, despite IAS requiring the opposite.
  • Pre-operating expenses are often treated as assets rather than expenses.
  • Deferred taxes are not generally accounted for, and contingencies are not adequately disclosed.

Key Findings

• The SEC has mandated the use of IAS for listed companies, but enforcement is weak.
• The ICAB has not updated its standards in line with revised IAS, leading to a mismatch between designed and practiced standards.
• There is a lack of implementation guidelines for both BAS and IAS, contributing to inconsistent application.
• The current legal framework does not ensure that IAS are applied in practice, especially for non-listed entities.
• The profession's poor image and inadequate training deter high-quality students from entering the field.

Policy Recommendations

• Establish an Independent Financial Reporting Council to oversee the adoption, monitoring, and enforcement of IAS and ISA.
• Develop a Simplified Financial Reporting Framework for small- and medium-sized enterprises.
• Update the Statutory Framework to align with IAS and eliminate inconsistencies.
• Strengthen the ICAB's Capacity to ensure quality assurance, continuous professional development, and effective enforcement of standards.
• Revise the Code of Ethics for professional accountants to align with the IFAC Code of Ethics.
• Improve Professional Education and Training to include updated IAS and ISA content, enhance teaching quality, and attract high-quality students.
• Implement Effective CPE Programs to ensure accountants remain updated on international developments.
• Enhance Compliance Monitoring by regulatory bodies, including the SEC, Bangladesh Bank, and the Chief Controller of Insurance.
• Provide Implementation Guidelines for IAS and BAS to ensure consistent application across the sector.
• Ensure Legal Mandates for the application of IAS in financial reporting, especially for public-interest entities.

Conclusion

The report highlights the need for comprehensive reform in Bangladesh's accounting and auditing practices to align with international standards. Institutional and professional capacity building, along with stronger enforcement mechanisms and updated education programs, are essential to improving the quality of corporate financial reporting in the country.