Harmonization of Financial Reporting and Audit Practices - Bangladesh Perspective

8/20/2019 Harmonization of Financial Reporting and Audit Practices - Bangladesh Perspective

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ICAB

MEMBERS’ CONFERENCE

Harmonization of Financial Reporting andAudit Practice ! Banglade" Perpecti#e

An$aruddin C"o$d"ur% fca

Content Page

01. Executive Summary 01

02. Preamble 03

03. The IAS/IFRS and The ISA The !l"bal Acc"untin#/Re$"rtin# and Auditin# 0%&"de' ("r )arm"ni*ati"n "( Financial Re$"rtin# and Audit $ractice'

0+. Internati"nal Standard' Settin# Pr"ce'' / ,"die' 0-

0. )arm"ni*ati"n "( Acc"untin# and Financial Re$"rtin# Practice' 10

0%. )arm"ni*ati"n "( Auditin# Practice' 12

0. )arm"ni*ati"n "( Public Sect"r Acc"untin# Auditin# Practice' 1+

0-. R"le "( SAFA/&APA in Re#i"nal )arm"ni*ati"n 1

0. In'tituti"nal e#al Re#ulat"ry Frame4"r5' in ,an#lade'h 1-

10. Ad"$ti"n Statu' "( IAS/IFRS and ISA in ,an#lade'h 1-

11. &hallen#e' / imitati"n' "( )arm"ni*ati"n 20

12. 6$$"rtunitie' / Pr"'$ect' "( )arm"ni*ati"n 21

13. P"licy I''ue' and Rec"mmendati"n' 22

1+. The 7ay F"r4ard 2+

1. &"nclu'i"n / E$il"#ue 2+

Appendice 2%

A&&re#iation 2

Reference 30


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'() E*EC+,I-E S+MMAR.

A' 4e 'tand "n the thre'h"ld "( the 'ec"nd decade "( the ne4 8illennium in the 4a5e "( /11 9nineeleven: and the 7e't;' '" called


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enhancin# #""d #"vernance in c"r$"rate 'ect"r' and $r"vidin# reliable in("rmati"n t" u'er #r"u$'9'ta5eh"lder': ("r deci'i"n ma5in# $ur$"'e'.

The le#al re'$"n'ibility ("r the $re$arati"n "( Financial Re$"rt' 9FR: i' that "( c"m$any mana#ement.The audit"r;' re'$"n'ibility i' t" ex$re'' an h"ne't "bCective inde$endent ex$ert $r"(e''i"nal "$ini"n"n the


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re#ulat"ry reuirement' and c"m$liance 4ith the acc"untin#/ re$"rtin# 'tandard' c"de' and$ractice'. The A4ard' c"m$etiti"n 'erve' a' a cataly't ("r tran'$arent (inancial re$"rtin# andenhancin# the level "( harm"ni*ati"n in acc"untin# and auditin# $ractice' thr"u#h adeuatea$$r"$riate a$$licati"n "( the Standard' @ re(lectin# #reater


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,an#lade'h ha' made 'i#ni(icant 'tride' in it' ec"n"mic 'ect"r $er("rmance 'ince 11. It rec"rded%. L !?P #r"4th (i'cal in 2010@11 and %.2L in 2011@12. ,an#lade'h i' c"n'idered a' adevel"$in# ec"n"my 4hich ha' rec"rded !?P #r"4th ab"ve L durin# the la't 'everal year'.8icr"credit ha' been a maC"r driver "( ec"n"mic devel"$ment in ,an#lade'h. Alth"u#h "ver %0L "( the $"$ulati"n i' em$l"yed in the a#riculture 'ect"r ab"ut 0 L "( ex$"rt' revenue' arederived (r"m the readymade #arment' indu'try. The bi##e't "b'tacle' t" 'u'tainable

devel"$ment in ,an#lade'h are "ver$"$ulati"n $""r in(ra'tructure c"rru$ti"n $"litical in'tabilityand a 'l"4 im$lementati"n "( ec"n"mic re("rm'. !?P #r"4th ("r the current 2011@12 i' ex$ectedt" exceed %L alth"u#h in(lati"n i' '$irallin# and inve'tment declinin#. At $re'ent the c"untry;'("rei#n exchan#e re'erve' exceed DS M 11 billi"n and remittance' am"unt t" ab"ut DS M 1+billi"n. There ha' been 'i#ni(icant im$r"vement in the balance "( $ayment'@ e''entially (r"mmaC"r $"licy im$r"vement' li5e m"nit"rin# $"licy c"rrecti"n ex$"rt' rec"very declinin# im$"rt'and remar5able $er("rmance "( remittance'.

Su'tainability "( the enablin# envir"nment ("r #r"4th $er("rmance in F12@13 i' a challen#in# ta'5c"n'iderin# the #r"4in# d"4n'ide ri'5'. The ca$ital 9'ecuritie': mar5et ha' been a 'i#ni(icantd"4n4ard trend 4ith ?ha5a St"c5 Exchan#e mar5et ca$itali*ati"n havin# declined dra'tically (r"mab"ut DS M + billi"n in 200 t" DS M 2+ billi"n $re'ent. There i' a credit crunch in the ec"n"my andthe !"vernment i' b"rr"4in# heavily (r"m the ban5in# 'ect"r t" (inance it' $ublic ex$enditure and

annual devel"$ment $r"#ramme'. F"rei#n and d"me'tic inve'tment in the ec"n"my i' al'" "n ad"4n4ard trend. ?e'$ite the a$$arent ne#ativitie' ,an#lade'h;' macr"@ec"n"mic 'tability i''ati'(act"ry and the c"untry;' ec"n"mic mana#ement ha' been a$$lauded by the d"n"r c"mmunitie'.,an#lade'h i' $re'ently termed a' "ne "( the next 11 emer#in# ec"n"mie' 4"rld4ide. ,an#lade'hec"n"my ha' dem"n'trated tremend"u' re'ilience t" the !F& a' mani(e'ted by it' relatively'ati'(act"ry #arment' ex$"rt ("rei#n remittance' macr"@ec"n"mic 'tability and "verall !?P $"'iti"n.)"4ever the ec"n"my i' n"4 bein# ne#atively im$acted by $erc"latin# e((ect' "( the a##ravatin#Eur"*"ne &ri'i'.

3lo&al Economic Scenario ! It Impact on Harmonization of Financial Reporting and Audit Practice

?av"' 7"rld Ec"n"mic F"rum 2013 &auti"u' 6$timi'mG ?"4n'ide Ri'5' "( Eur" ?ebt &ri'i'.

The #l"bali*ati"n "( ec"n"mie' $"'e' ban5in#'ect"r techn"l"#ical aut"mati"n ("r $ayment'/'ettlement and electr"nic (und' tran'(er> (inancialinclu'i"n and di#itali*ati"n "( the c"untry> and )FRAP a' a vehicle ("r inve'tment indu'triali*ati"nca$ital mar5et devel"$ment and "verall ec"n"mic #r"4th "( the c"untry. &han#e' in le#al re#ulat"ry(rame4"r5' im$lementati"n "( c"r$"rate #"vernance and &SR 'u'tainability and inte#rated re$"rtin#$ractice' al'" 4arrant c"n'iderati"n'.

In the li#ht "( c"l"''al c"r$"rate (raud' in the DS @ cau'ed by the Enr"n 7"rld&"m and 7e't'candal' ("ll"4ed by Parmalat in Eur"$e in the early $art "( thi' millennium 9and Satc"m&"m$uter' in India in recent year': revealin# the c"llu'ive inv"lvement 9thr"u#h c"r$"rate#"vernance and internal c"ntr"l (ailure': and c"n'euential c"lla$'e "( 'uch leadin# #l"bal$r"(e''i"nal $ractice' li5e Arthur Ander'"n' have #reatly 'hattered the credible re(lecti"n "( the$r"(e''i"n. The tran'$arency and credibility "( acc"untin# and audit (uncti"n' 4ere called t" ue'ti"nand rai'ed 'ce$tici'm ab"ut the $r"(e''i"n;' ability t" 'erve the $ublic intere'tG )ence it ha' bec"meab'"lutely im$erative ("r the $r"(e''i"n t" re#ain 'ta5eh"lder c"n(idence and credibility t" 'erve the$ublic intere't. The #l"bal ec"n"mic 'cenari" ha' been deva'tated by the $revailin# #l"bal (inancial meltd"4nec"n"mic d"4nturn and the 4"r't rece''i"n in livin# mem"ry @ tri##ered by


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c"ntr"l' 9DS SE& / DJ FSA and their Eur"$ean c"unter$art': and unbridled dere#ulati"n' 4hich4arranted 'tate interventi"n'. Initiated in the American and Eur"$ean (inancial 'ect"r and ca$italmar5et' in 200- the !F& ha' e'calated thr"u#h"ut the devel"$ed and devel"$in# c"untrie' and$lun#ed the 4"rld ec"n"my int" the dee$e't rece''i"n in hi't"ry. Bati"nal !"vernment' 9li5e DSADJ !ermany and a$an: t"#ether 4ith internati"nal (inancial in'tituti"n' 9li5e the 7, and I8F: haveta5en $r"m$t mea'ure' t" bail@"ut the a((ected in'tituti"n' and ec"n"mie'. )"$e(ully the 4"r't im$act

i' "ver and the #l"bal ec"n"mic rec"very ha' c"mmenced.Ec"n"mic !r"4th @ $ercenta#e chan#e in c"untry/re#i"n annual !?P

The I8F ha' $redicted that the !l"bal Ec"n"my may ex$erience the 'l"4e't #r"4th rate' 'incerece''i"n a' Eur"*"ne $"'e' d"4n'ide ri'5 in 2012@13. There i' real ri'5 that the Eur" ?ebt &ri'i'may lead t" an even 'har$er dr"$ in real ec"n"mic activity havin# a ri$$le e((ect "n the #l"balec"n"my and e'calatin# d"4n4ard' t" ab"ut 1L in 2012.

The event' "( the !F& and E?& have hi#hli#hted the need ("r ec"n"mie' all r"und the 4"rld t" haveacce'' t" reliable (inancial in("rmati"n a' a $rec"nditi"n ("r the re't"rati"n "( c"n(idence in the #l"balmar5et$lace. Thi' i' a need that Acc"untant' are uniuely $re$ared t" meet 4hether a' $re$arer' "r audit"r' "( (inancial 'tatement' a' bu'ine'' advi'er' "r indeed a' re#ulat"r'. The 'tandard 'etter'and acc"untin# $r"(e''i"nal' (irmly believe that 4ell $re'ented (inancial re$"rt' act a' a H'ine@u"@n"n; t" the $r"$er (uncti"nin# "( a mar5et ec"n"my. The (inancial cri'i' ha' clearly dem"n'trated thatit i' indeed a #l"bal $r"blem that demand' a #l"bal '"luti"n. The cri'i' ha' hi#hli#hted the criticalnature "( (inancial re$"rtin# t" the (uncti"nin# "( mar5et' and the im$"rtance "( achievin# a 'in#le 'et"( harm"ni*ed hi#h uality acc"untin# 'tandard'. The !20 Pitt'bur# Summit @ c"nvened ("r devi'in#a c"mm"n a$$r"ach t" "verc"me the im$act "( the cri'i'/ rece''i"n@ ha' em$ha'i*ed "n the need ("r


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4"uld im$act a $"'itive dimen'i"n t" the $re'entati"n and audit "( $ubli'hed (inancial in("rmati"n inline 4ith current internati"nal $ractice'. Thi' 4"uld induce #reater acc"untability "( c"r$"ratemana#ement 9deci'i"n': and credible tran'$arency "( re$"rted (inancial in("rmati"n. )FRAPthr"u#h im$lementati"n "( IAS/IFRS and the ISA/IAPS there("re re$re'ent' a maC"r #l"bal challen#e(acin# the (inancial and c"r$"rate envir"nment.

A' a 'i#nat"ry t" the !ATS/7T6 ?"cument the !"vernment may be reuired t" $r"vide mar5etacce'' t" the (inancial and $r"(e''i"nal 'ervice' 'ect"r' 4hich under the banner "( reci$r"city 4"uldreuire the h"me c"untry t" $r"vide eual (acilitati"n t" all ("rei#n 'ervice renderer' Cu't a' much a' it$r"vide' t" it' "4n 'ervice renderer'. )ence the c"untry;' (inancial and c"r$"rate 'ect"r' and the$r"(e''i"nal 9acc"untancy: 'ervice' need t" be adeuately 'tren#thened and ver'atili*ed t" maintaintheir c"m$etitive ed#e in (acin# the emer#in# challen#e' c"m$etently and utili*in# the "$$"rtunitie'bene(icially ("r the ec"n"mic devel"$ment "( ,an#lade'h.

'5) ,HE IAS1IFRS AN2 ,HE ISA ! ,HE 30OBA0 ACCO+N,IN31REPOR,IN3 AN2 A+2I, CO2ESFOR HARMONI6A,ION OF FINANCIA0 REPOR,IN3 AN2 A+2I, PRAC,ICES

Mo#ing to IAS1IFRS ! Rationale of t"e Argument

There are irre'i'tible #l"bal $re''ure' a((ectin# the ,an#lade'h ec"n"my 4hich 4arrant the Acc"untancy Pr"(e''i"n t" im$lement 'tandardi*ati"n "( acc"untancy $ractice' thr"u#him$lementati"n "( IAS/IFRS. The'e (act"r' enc"m$a'' inter@aliaN

Addre''in# the im$act "( recent Eur"*"ne ?ebt &ri'i' @ ec"n"mic rece''i"n 92011@2012: The c"n'euential im$act "( !l"bal Financial &ri'i' @ ec"n"mic rece''i"n 9200-@10:

The c"r$"rate (raud'/I& (ailure' "( the early decade "( thi' millennium 92001@03: The ASEAB (inancial cri'i' "( the late ninetie' 91@-: !l"bal 'hi(t (r"m 'tate c"ntr"lled t" mar5et ec"n"my !l"bal ec"n"mic de@re#ulati"n and trade liberali*ati"n 9'ince;-0': Increa'in# r"le "( the $rivate 'ect"r a' the en#ine "( #r"4th

7"rld4ide mar5et $r"li(erati"n by multinati"nal c"m$anie' Im$act "( 7T6 / !ATS "n trade and 'ervice' 'ect"r' 8utual rec"#niti"n "( acc"untancy uali(icati"n and cr"''@b"rder $ractice'

The $"''ibility "( im$"'iti"n "( an "ver'i#ht/re#ulat"ry b"dy 9FR&,: Inten'e c"m$etiti"n (r"m 4ithin and "ut'ide the $r"(e''i"n Increa'ed !"vernmental '"cietal and ethical $re''ure' Increa'ed 'ta5eh"lder and '"cietal ex$ectati"n'/ meetin# the $ublic intere't Increa'ed 5n"4led#e #reater demand' and chan#e' in client attitude' &"$in# 4ith $hen"menal tran'("rmati"n in I&T 'ervice' a((ectin# bu'ine''

Inc"nceivable techn"l"#ical advancement in internet and 'mart $h"ne 'ervice' 8"bile ,an5in# and Financial Inclu'i"n 'ervice'.

Recent ban5in#/ (inancial 'ect"r (raud' 9'cam': in ,an#lade'h.

Acc"untin# ha' al4ay' been ac5n"4led#ed a' the Hlin#ua (ranca; "( bu'ine''. It i' a 'ervice activityaimed at $r"vidin# relevant reliable ualitative c"m$arable (inancial in("rmati"n ("r a variety "( u'er #r"u$'. The a$$licati"n "( IAS/IFRS render' hi#h uality (inancial in("rmati"n that 'ati'(ie' the


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ar#ue that thi' uni(ied lan#ua#e "( bu'ine'' i' the 'tandardi*ati"n acc"untin# $ractice' thr"u#ha$$licati"n "( the IAS/IFRS. )ence the lan#ua#e "( bu'ine'' ha' m"ved t" a '$eci(ic (r"ntier that "( the IAS/IFRS dimen'i"n.

There i' a clear and #r"4in# demand ar"und the 4"rld ("r #l"bal hi#h uality acc"untin# 'tandard'that #ive tran'$arency and c"m$arability. Thi' demand ha' been inten'i(ied in recent year' by

ma''ive increa'e' in cr"'' b"rder trade and inve'tment. Increa'ed im$etu' ha' c"me (r"m the need("r reliable (inancial in("rmati"n in devel"$in# and tran'iti"nal c"untrie'. A$$licati"n "( Internati"nalStandard' are al'" mandated / de'ired by the 7, A?, ED/E& DB a#encie' and "ther devel"$ment$artner' "n b"rr"4er' and reci$ient' "( ("rei#n aid and technical a''i'tance.

The (ir't 8ini'terial meetin# "( the 7T6 held in Sin#a$"re in ?ecember 1% had identi(ied Acc"untancy a' the m"'t internati"nali*ed and the m"'t im$"rtant 'ervice 'ect"r ("r $r"m"tin# tran'@b"rder (l"4 "( (und'. !""d (inancial re$"rt' $r"m"te inve't"r c"n(idence (acilitate the (l"4 "( inve'tment (und' and thereby enc"ura#e ec"n"mic #r"4th. Financial Re$"rtin# a' the lan#ua#e "( bu'ine'' ha' n"4 ta5en a '$eci(ic dimen'i"n@ that "( the IAS/IFRS and by $r"ce'' "( anal"#y ("r audit $ur$"'e'@ that "( the ISA/IAPS. The im$lementati"n "( !ATS/ 7T6 ?"cument $re'u$$"'e'


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In the li#ht "( the ab"ve di'cu''i"n it i' a$$arent that the IAS/IFRS have emer#ed a' the !l"bal Acc"untin# &"de ("r )arm"ni*ati"n "( Financial Re$"rtin# Practice' 4"rld4ide. In vie4 "( theinterrelati"n'hi$ "( the audit atte'tati"n (uncti"n ("r credibility "(


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IFRS4 Standard Setting Proce

The IAS, i' re'$"n'ible ("r the c"nce$ti"n devel"$ment and $r"mul#ati"n "( de(initive acc"untin#and (inancial re$"rtin# 'tandard' meant ("r mandat"ry a$$licati"n in #l"bal Curi'dicti"n' 94herever ad"$ted: 5n"4n a' the Internati"nal Financial Re$"rtin# Standard' 9IFRS:. The'e 'tandard'$revi"u'ly i''ued by the IAS& 4ere de'i#nated a' the IAS. The IFRS 'tandard 'ettin# $r"ce''entail' c"nceivin# "( an acc"untin#/ re$"rtin# t"$ic "( current ec"n"mic "r $r"(e''i"nal im$"rtance9li5e Acc"untin# ("r S8E': and devel"$in# and Ex$"'ure ?ra(t 9E?: ("r $ublic c"mment by a Steerin#&"mmittee 9S&:. The E? i' then circulated am"n# relevant 'ta5eh"lder' @ includin# the $r"(e''i"nal

b"die' and bi# (irm' re#ulat"ry a#encie' the (inancial and c"r$"rate 'ect"r' 9multinati"nal'/chamber b"die': the academia and "ther in'tituti"n'@ invitin# revie4' c"mment' and critici'm' 4ithin a'ti$ulated date 9u'ually 0@120 day':. The $ublic (eedbac5 i' then c"n'idered revie4ed anda''e''ed by the S& in the li#ht "( #iven circum'tance' and m"di(icati"n' made t" the $r"$"'ed E? i( deemed a$$r"$riate. The (inal d"cument i' then i''ued in the ("rm "( a de(initive $r"n"uncementde'i#nated a' an IFRS. The Standard $re'cribe' c"m$liance in all material re'$ect' 4ith all it'reuirement' in the $re$arati"n and $re'entati"n "( FS. Any deviati"n (r"m the $re'cribedc"m$liance reuirement' 9a' t" acc"untin# treatment and/"r di'cl"'ure': need' t" be ex$lained anduanti(ied 4herever $"''ible. The IFRS may be a #eneral $ur$"'e Standard "r intended ("r '$eci(ic$ur$"'e a$$licati"n. It may relate t" acc"untin# treatment 4hich c"nn"te' rec"#niti"n andmea'urement "r it may be a di'cl"'ure "riented 'tandard e''entially c"ncerned 4ith $re'entati"n "( item' "n the FS. The IAS c"ntinue' t" be c"ncurrently en("rceable unle'' "ther4i'e 4ithdra4nre$laced "r 'u$erceded by an IFRS.

ISA4 Standard Setting Proce

The Internati"nal Auditin# and A''urance Standard' ,"ard 9IAAS,: "( the IFA& i' re'$"n'ible ("r thec"nce$ti"n devel"$ment and i''uance "( de(initive auditin# 'tandard' meant ("r mandat"rya$$licati"n in #l"bal Curi'dicti"n' 94herever ad"$ted: 5n"4n a' the Internati"nal Standard' "n Auditin# 9ISA:. The IAAS, al'" i''ue' Internati"nal Audit Practice Statement' 9IAPS: in a 'imilar manner ("cu'ed "n $r"(e''i"nal acce$tance and im$lementati"n. The ISA 'tandard 'ettin# $r"ce''entail' c"nceivin# "( an auditin# t"$ic "( current ec"n"mic "r $r"(e''i"nal im$"rtance 9li5e !"in#&"ncern: and devel"$in# a ?i'cu''i"n ?ra(t 9??: ("r $ublic c"mment. The ?? i' then circulatedam"n# relevant 'ta5eh"lder' @ includin# the $r"(e''i"nal b"die' and bi# (irm' re#ulat"ry a#encie'the (inancial and c"r$"rate 'ect"r' 9multinati"nal'/chamber b"die': the academia and "ther in'tituti"n'@ invitin# revie4' c"mment' and critici'm' 4ithin a 'ti$ulated date 9u'ually 0@120 day':.The $ublic (eedbac5 i' then c"n'idered revie4ed and a''e''ed by the IAAS, in the li#ht "( #ivencircum'tance' and m"di(icati"n' may be made t" the $r"$"'ed ?? i( deemed a$$r"$riate. The (inald"cument i' then i''ued in the ("rm "( a de(initive $r"n"uncement de'i#nated a' an ISA. TheStandard $re'cribe' c"m$liance in all material re'$ect' 4ith all it' reuirement' in c"nductin# theaudit "r re$"rtin# "n the audit "( #eneral $ur$"'e 9"r '$ecial $ur$"'e: (inancial 'tatement'. Anydeviati"n (r"m c"m$liance 4ith the $re'cribed audit reuirement' need' t" be adeuately ex$lainedand Cu'ti(ied. The ISA may relate t" the c"nduct "( an audit @ meth"d"l"#y "riented 'tandard 9li5e audituality a''urance/ evidence: "r a re$"rtin# 'tandard 9audit "$ini"n:.

International Accounting Standard Board :IASB;

The "nd"n ba'ed IAS, be#an "$erati"n' in 2001 a' a 'ucce''"r t" the Internati"nal Acc"untin#

Standard' &"mmittee 9IAS&: ("rmed in 13. The IAS, i' c"mmitted


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c""$erate' 4ith nati"nal acc"untin# 'tandard@'etter' be(inancially and "$erati"nally viable and haven a$$r"$riate #"vernance 'tructure'> ma5e (inancialc"ntributi"n' and meet the "ther criteria de'cribed in the member'hi$ a$$licati"n $r"ce'' the IFA&c"n'tituti"n and the IFA& ,ye@a4'.

,"e International Auditing and Aurance Standard Board :IAASB; of t"e IFAC 'erve' the

$ublic intere't byN 'ettin# inde$endently and under it' "4n auth"rity hi#h@uality Internati"nalStandard' "n Auditin# 9ISA: and a''urance 'tandard' and (acilitatin# the c"nver#ence "( nati"naland internati"nal auditin# and a''urance 'tandard'. Thi' c"ntribute' t" enhanced uality anduni("rmity "( $ractice in the'e area' thr"u#h"ut the 4"rld and 'tren#thened $ublic c"n(idence in(inancial re$"rtin#. At $re'ent the IAAS, e(("rt' are 'trate#ically ("cu'ed "n three area' t" achieve it'"bCective @ ?evel"$ment "( 'tandard'> 8"nit"rin# and (acilitatin# ad"$ti"n "( th"'e 'tandard'> andRe'$"ndin# t" c"ncern' ab"ut the im$lementati"n "( the 'tandard' by activitie' de'i#ned t" im$r"vethe c"n'i'tency 4ith 4hich they are a$$lied in $ractice. The IAAS,O' $r"n"uncement' #"vern auditrevie4 "ther a''urance and uality c"ntr"l and related 'ervice' en#a#ement' that are c"nducted inacc"rdance 4ith internati"nal 'tandard'. The IAAS,O' clari(ied Internati"nal Standard' "n Auditin#9ISA': are n"4 e((ective and audit"r' 4"rld4ide are ad"$tin# and im$lementin# the'e 'tandard'. TheIAAS, rec"#ni*e' that the im$lementati"n "( it' 'tandard' i' a' im$"rtant a' their devel"$ment andha' c"mmitted t" a number "( activitie' t" (acilitate e((ective im$lementati"n.

'


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Financial Statement' re(lect a 'tructured (inancial re$re'entati"n "( the (inancial $"'iti"n "( andtran'acti"n' underta5en by an entity durin# a $articular $eri"d "( time. A c"m$lete 'et "( FinancialStatement' include' the ("ll"4in# c"m$"nent'N

a. ,alance Sheet "r Statement "( a((air'b. Pr"(it and "'' Acc"unt "r Inc"me Statementc. &a'h Fl"4 Statementd. &han#e' in Euity 'tatemente. Acc"untin# P"licie' and Ex$lanat"ry B"te'

Financial Re$"rtin# $r"vide' u'e(ul in("rmati"n ab"ut the (inancial $"'iti"n (inancial $er("rmance andca'h (l"4' "( an entity t" a 4ide ran#e "( u'er #r"u$ includin# exi'tin# 'hareh"lder' $"tentialinve't"r' lender' credit"r' tax auth"ritie' !"vernment Re#ulat"r the SE& devel"$ed ,an5 St"c5Exchan#e ec"n"mic $lanner' and trade uni"n': ("r ec"n"mic deci'i"n ma5in#. The '$eci(ic"bCective' "( (inancial re$"rtin# enc"m$a'' the 'te4ard'hi$ (uncti"n deci'i"n u'e(ulne''c"n(irmat"ry evidence and 'tatut"ry c"m$lianceN

)arm"ni*ati"n "( Financial Re$"rtin# 9FR: $ractice' re(er' t" c"nver#ence thr"u#h "verc"min#inc"n'i'tencie' and narr"4in# d"4n area' "( di((erence' in (inancial re$"rtin# $ractice' 9Acc"untin#treatmentRec"#niti"n and mea'urement Pre'entati"n?i'cl"'er "( item' in FS:. The


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'tandard' 9rec"#niti"n and mea'urement related: and re$"rtin# 'tandard' 9di'cl"'ure related:.Th"u#h acc"untin# 'tandard' are #enerally 'imilar the re$"rtin# "r di'cl"'ure 'tandard' may vary'i#ni(icantly (r"m entity t" entity and (r"m c"untry t" c"untry becau'e "( di((erence in c"r$"rate"bCective' and ec"n"mic '"ci"@$"litical envir"nment'. )ence rati"nali*ati"n "( di'cl"'ure' i'e''ential ("r achievin# #l"bal harm"ni*ati"n in acc"untin# $ractice' and $re'entati"n.

Benefit of Harmonization t"roug" IAS1IFRS

The c"m$lexity "( bu'ine'' enter$ri'e' and tran'acti"n' and the ra$id #r"4th "( multinati"nal entitie'cr"'' b"rder inve'tment' and the #l"bali*ati"n "( bu'ine'' activitie' in recent year' have had a'i#ni(icant im$act "n the nature and uality "( (inancial re$"rtin#. Acc"untin# Standard' diver#e4"rld4ide .!l"bali*ati"n "( (inancial mar5et' ha' hi#hli#hted the need t" narr"4 di((erence' bet4eeninve'tment activity 9traditi"nally internati"nal: and acc"untin# activity 9traditi"nally d"me'tic: in nature.

Acc"untin# i' de'cribed a' the lan#ua#e "( bu'ine''. A' 4ith any c"mmunicati"n it i' im$"rtant thatthe $re$arer' and the u'er' ("ll"4 the 'ame


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3eneral Conideration

There are c"n'iderable $re''ure' (r"m the devel"$ment $artner' re#ulat"ry a#encie' the!"vernment and "ther 'ta5eh"lder' 4hich 4arrant the acc"untancy $r"(e''i"n t" im$lement


17/35

hel$in# t" ma5e the direct"r'/ mana#ement acc"untable t" the 'hareh"lder'/ "4ner'hi$ and "ther 'ta5eh"lder' u'in# the (inancial in("rmati"n ("r deci'i"n $ur$"'e'.

Accountability for Stewardship System of Financial Reporting

Significance of ISA in Audit Harmonization

The ISA are i''ued by the IAAS, "( the IFA& t" e((ect


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1. The &A!;' "((ice $re$are' the annual A$$r"$riati"n Acc"unt "( the !"vernment 4hich i''ubmitted t" the Pre'ident and laid be("re Parliament under Article 132 "( the &"n'tituti"n.

3lo&al Scenario

The !l"bal Financial &ri'i' and recent S"verei#n ?ebt &ri'i' ar"und the 4"rld ha' 4arranted #reater em$ha'i' "n im$r"ved #"vernmental (inancial re$"rtin# and increa'ed level' "( acc"untability andtran'$arency in $ublic (inancial mana#ement. 8any c"untrie' initially ad"$tin# ca'h@ba'ed acc"untin#have m"ved t" '"$hi'ticated m"di(ied ca'h "r accrual ba'i'. A recent Re$"rt by the IPSAS ,"ardindicated that "ver -0 c"untrie' have either ad"$ted "r have $r"ce''e' in $lace t" ad"$t IPSAS ("r $ublic 'ect"r (inancial mana#ement/ re$"rtin# includin# 'everal A'ian c"untrie'.

The !l"bal Financial &ri'i' 9!F&: 200-@0 9tri##ered by the DS 'ub@$rime m"rt#a#e mar5et c"lla$'eand im$"'in# c"l"''al trilli"n d"llar !"vernment bail"ut $ac5a#e' in the devel"$ed ec"n"mie':e'calated by the recent Eur" *"ne S"verei#n ?ebt &ri'i' 94ith c"n'euential c"ntracti"n "( maC"r Eur"$ean ec"n"mie': i' $reci$itatin# the entire #l"bal ec"n"my int" a dee$ rece''i"n. 7hile,an#lade'h and the re#i"nal c"untrie' have dem"n'trated remar5able re'ilience earlier "ur !"vernment' are n"4 'eri"u'ly c"ncerned "n 'a(e#uardin# "ur nati"nal ec"n"mie' a#ain't there$ercu''i"n' "( the deteri"ratin# #l"bal rece''i"n 9ne#ative im$acti"n "n macr"@ec"n"mic 'tabilityand ec"n"mic #r"4th:. The $revailin# #l"bal ec"n"mic 'cenari" ha' c"ncurrently accentuated theneed ("r im$r"ved !"vernment (inancial re$"rtin# ("r en'urin# enhanced level' tran'$arency andacc"untability ("r Stren#thenin# "( ,an#lade'h Public Sect"r Acc"untin# and Auditin#.

The credit cri'i' ha' rai'ed 'everal $ublic 'ect"r acc"untin# i''ue'. !"vernment' have extendedcredit t" ban5' #uaranteed the liabilitie' "( ban5' $urcha'ed im$aired debt in'trument' and in '"mein'tance' have a''umed c"ntr"l "( ban5'. The uniue nature "( the credit cri'i' and theun$recedented re'$"n'e by !"vernment' ar"und the 4"rld ha' rein("rced the im$"rtance "( hi#h@uality 'tandard' ("r (inancial re$"rtin# by !"vernment'. The credit cri'i' ha' increa'ed the need ("r acc"untability in the $ublic 'ect"r and ("r tran'$arency in it' (inancial dealin#' and thu' theim$lementati"n "( IPSAS by the ec"n"mie'.

Strengt"ening Banglade" PSFM

The 6((ice "( &A! ,an#lade'h ha' traditi"nally $racticed a reliable 'y'tem "( ca'h ba'i' !"vernment Acc"untin# re$"rtedly en'urin# adeuate level' "( tran'$arency and acc"untability. In recent year'and in line 4ith #l"bal re("rm' the 6&A! ha' c"n'"lidated it' traditi"nal meth"d thr"u#h c"m$liance4ith the &a'h ,a'i' IPSAS 9Financial Re$"rtin# under the &a'h ,a'i' "( Acc"untin#: ("r the c"untry;'Public Sect"r Acc"untin# and Auditin#. !iven adeuate re'"urce' and technical 'u$$"rt the 6&A! i'$re$ared t" im$lement Accrual Acc"untin# "n a $il"t ba'i' and then m"ve "nt" accrual ba'ed IPSAS.The 6&A! ,an#lade'h i' al'" re$"rtedly c"m$liant 4ith the IBT6SAI Auditin# Standard'. The 6&A!ha' al'" c"mmitted t" im$lement IFA& end"r'ed ISSAI' 4ithin a (ea'ibly $racticable time(rame ("r rec"rdin# and re$"rtin# "( a''et' and liabilitie'> and 5ee$in#$r"$er rec"rd' ("r $re$arati"n "( acc"unt' and $re'entati"n "( (inancial in("rmati"n ("r deci'i"nma5in# $ur$"'e'.

The !6, mu't en'ure that $ublic (und' are ex$ended in the "$timum manner en'urin# ec"n"mye((iciency and e((ectivene'' and re(lectin# acc"untability "( ex$enditure deci'i"n' and tran'$arency"( in("rmati"n. T" en'ure $r"$er (inancial mana#ement there mu't be an adeuate 'y'tem "( bud#etin# acc"untin# and (inancial re$"rtin# internal c"ntr"l and Auditin# "( the !"vernment8ini'trie' ?ivi'i"n' !I' Sect"r &"r$"rati"n' 8i''i"n' S6E' and S6,'. Acc"untability re(er' t"'te4ard'hi$ "( re'"urce' and individual' entru'ted ("r their utili*ati"n and mana#ement. The e''ential

c"m$"nent' "( acc"untability include Acc"untability ("r (inancial re'"urce'> (aith(ul c"m$liance andadherence t" le#al reuirement' and admini'trative $"licie'> e((iciency and ec"n"my in "$erati"n>re'ult' "( #"vernment $r"#ram' re(lectin# their acc"m$li'hment' and e((ectivene''.

15 | P a g e


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There are t4" technical a''i'tance $r"Cect' $re'ently under im$lementati"n 4hich are aimed atStren#thenin# PSF8 thr"u#h ca$acity buildin# and in'tituti"nal devel"$ment "( the 6&A!. Thi' t4"$r"Cect' are the &I?A (unded M10 milli"n $r"Cect "n Stren#thenin# &"m$tr"ller'hi$ and 6ver'i#ht "( Public Ex$enditure 9S&6PE: and the 7, led multi d"n"r (unded M3 milli"n $r"Cect' "nStren#thenin# Public Ex$enditure 8ana#ement Pr"#ram' 9SPE8P ,:

PPP &et$een OCA3 and ICAB for Impro#ed Audit ualit% Aurance

Dnder a 7, (unded $r"Cect ca$ti"ned


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Re$"rt a' 4ell a' a &"n(idential Re$"rt addre''ed t" the Secretary "( the c"ncerned 8ini'try 9S6,'@Finance:. The'e re$"rt' are n"t addre''ed t" the 'ta5eh"lder' a' i' the $ractice in the ca'e "( $rivate'ect"r audit'. !"vernment 8ini'trie' ?ivi'i"n' ?e$artment' Sub"rdinate !"vernment "((ice' and"cal !"vernment In'tituti"n' are c"m$letely "ut'ide the $urvie4 "( any 5ind "( external $r"(e''i"nalaudit by inde$endent (irm' "( &hartered Acc"untant'. In the l"n# term )arm"ni*ati"n "( PSA/FR maybe achieved thr"u#h a$$licati"n "( ISSAI' 9i''ued by IBT6SAI: and ISA 9I''ued by IAAS, "( IFA&:.

7hile ISSAI' relate t" Public Sect"r Financial Auditin# the 6&A! ha' devel"$ed / are devel"$in#their "4n Standard' and !uideline' ("r Per("rmance Audit Envir"nment Audit F"ren'ic Audit under d"n"r aided $r"Cect'.

') RE3IONA0 HARMONI6A,ION OF ACCO+N,IN31FINANCIA0 REPOR,IN3 AN2 A+2I,PRAC,ICES ! RO0E OF SAFA1CAPA

,"e Sout" Aian Federation of Accountant :SAFA;

The SAFA 4a' ("rmed in 1-+ 9a year be("re SAAR&: t" 'erve u$h"ld and enhance the ima#e andcredibility "( the re#i"nal acc"untancy $r"(e''i"n. SAFA i' rec"#ni*ed a' an


21/35

(inancial mar5et' and ec"n"mie'. It i' envi'i"ned a' an in'$irati"nal leader ("r the acc"untin#$r"(e''i"n in the re#i"n. &APA aim' at $r"vidin# leader'hi$ in devel"$ment enhancement andc""rdinati"n "( the acc"untancy $r"(e''i"n in the A'ia@Paci(ic re#i"n t" enable the $r"(e''i"n t"$r"vide 'ervice' "( c"n'i'tently hi#h uality in the $ublic intere't. &APA ("'ter' a 'tr"n# and c"he'ive$r"(e''i"n by $r"vidin# leader'hi$ "n emer#in# i''ue' c""rdinatin# 4ith IFA& "ther re#i"nal andintra@re#i"nal "r#ani'ati"n' member b"die' and a''"ciate' t" achieve a$$r"$riate 'trate#ic

"bCective' and $r"m"te 'u'tainable in'tituti"n'. &APA i' the lar#e't re#i"nal acc"untancy #r"u$havin# 31 member' in 2+ c"untrie'.

&APA ha' a (irm c"mmitment ("r (ull (led#ed im$lementati"n "( harm"ni*ati"n "( Financial Re$"rtin# Audit Practice' b"th in the $rivate $ublic 'ect"r thr"u#h a$$licati"n "( IFRS ISA and IPSAS ISSAI' re'$ectively. &APA;' P"licy Statement (ully 'u$$"rt' the c"nver#ence t"4ard' IPSAS by allmember c"untrie' in the A'ia Paci(ic re#i"n t" a''i't in the im$r"vement "( $ublic 'ect"r (inancialmana#ement. Fr"m a $ublic intere't $er'$ective e((ective m"nit"rin# "( (inancial $er("rmance 4ithin$ublic 'ect"r entitie' i' critical. &APA 'u$$"rt' accrual@ba'ed (inancial re$"rtin# a' the "nly mean' t"$r"vide nece''ary hi#h uality tran'$arent re$"rtin# "( $ublic 'ect"r activitie' and $"'iti"n.

') INS,I,+,IONA0 0E3A0 RE3+0A,OR. FRAME7ORDS IN BAN30A2ESH

The le#al re'$"n'ibility ("r the $re$arati"n "( (inancial re$"rt' i' that "( c"m$any mana#ement. Theaudit"r;' re'$"n'ibility i' t" ex$re'' an h"ne't "bCective inde$endent ex$ert $r"(e''i"nal "$ini"n "nthe and all audit $ractice' are reuired t" en'urec"m$liance 4ith relevant ISA 9a' ad"$ted by the I&A,: in the c"nduct "( and re$"rtin# "n the audit"( FS "( li'ted entitie'. )ence the IAS and ISA duly ad"$ted by the I&A, a' the ,AS and ,SA n"4have a le#ally en("rceable mandat"ry im$lementati"n 'tatu' ("r all li'ted c"m$anie' in ,an#lade'h.

The I&A, &"uncil intend' t" amend it' ,ye@la4' in the immediate ("re'eeable (uture t" mandate


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audit "( Financial Statement' in ,an#lade'h. The &"uncil "( the I&A, thr"u#h it' Technical andRe'earch &"mmittee exerci'e' 'trin#ent vettin# $r"cedure' in it' IAS/ISA ad"$ti"n $r"ce''$articularly t" "verc"me any inc"n'i'tencie' and en'ure c"n("rmity 4ith l"cal la4' and re#ulati"n'.

In the ad"$ti"n $r"ce'' an IAS/IFRS "r ISA i' (ir't c"n'idered by the Technical and Re'earch&"mmittee 9TR&: "( the &"uncil I&A,. Therea(ter it i' critically revie4ed by a n"minated 'ub@

c"mmittee c"m$ri'in# "( "ne "r t4" member' 4h" 4"uld underta5e a 'trin#ent vettin# exerci'e t"en'ure eliminati"n "( any an"malie' "r inc"n'i'tencie' and en'ure c"n("rmity 4ith the reuirement "( the exi'tin# le#al re#ulat"ry reuirement'. ,a'ed "n the rec"mmendati"n' "( the Sub@c"mmittee andta5in# int" c"n'iderati"n nece''ary m"di(icati"n' the TR& then ("rmulate' it' rec"mmendati"n t" the&"uncil ("r ad"$ti"n. 6nce a$$r"ved by the &"uncil it bec"me' a de(initively ad"$ted ,an#lade'hFinancial Re$"rtin# Standard' 9,FRS: "r ,an#lade'h Standard' "n Auditin# 9,SA:. A' indicated in A$$endix I the IAS& had i''ued +1 IAS "( 4hich 2 are $re'ently a$$licable 9a(ter nece''ary re("rmattin#/revi'in#/'u$er'e''i"n and 4ithdra4al:. 7ith the exce$ti"n "( IAS 2 "n)y$erin(lati"n the I&A, ha' ad"$ted all the "ther 2- IAS extant a' ,AS. I&A, ha' ad"$ted 12 "ut "( 13 IFRS i''ued t" date by IAS, a' ,FRS. It ha' al'" ad"$ted IFRS ("r S8E' a$$licable ("r FSbe#innin# "n "r a(ter 1;' an 2013. )"4ever I&A, ha' n"t yet 'tarted ad"$ti"n "( the Internati"nalFinancial Re$"rtin# Inter$retati"n' 9IFRI&': i''ued by IAS,. It ha' al'" n"t c"mmenced ad"$ti"n "( the Internati"nal Public Sect"r Acc"untin# Standard' 9IPSAS: i''ued by the PS& "( the IFA&.

A' indicated in A$$endix II the I&A, ha' ad"$ted all the currently a$$licable 3% ISA and - IAPS i''uedby the IAP&/IAAS, "( the IFA& a' ,SA and ,APS re'$ectively. It ha' al'" ad"$ted 2 ISRE 2 ISAE and2 ISRS i''ued by the IAFA&. It ha' al'" 'imultane"u'ly ad"$ted the IAS, Frame4"r5 ("r IAS/IFRS andthe IFA& Frame4"r5 ("r ISA/IAPS a' ,an#lade'h Frame4"r5' 'ubCect t" nece''ary m"di(icati"n'4here nece''ary. The I&A, ha' al'" ad"$ted the IFA& &"de "( Ethic' and IS& 1 a' ,an#lade'h&"de "( Ethic' and ,S& 1 re'$ectively 'ubCect t" nece''ary m"di(icati"n' a' deemed a$$r"$riate.

It i' ha$$y t" n"te that I&A, i' n"4 (ully c"m$liant 4ith the IFA& S86' "n ad"$ti"n "( IFRS and ISAPr"(e''i"nal Ethic' and uality A''urance. A 'ummary "( the I&A, ad"$ti"n 'tatu' ("r IAS/IFRS a',AS/,FRS and ISA/IAPS a' ,SA/,APS t"#ether 4ith "ther ad"$ted 'tandard' and 'tatement' i'$r"vided in the annexed A$$endice'.

Adoption of IPSAS and ISSAI

The Public Sect"r' Acc"untin# Standard' 9IPSAS: and Auditin# Standard' 9ISSAI': i''ued by theIPSAS , "( IFA& and IBT6SAI are al'" annexed in a$$endix III and I re'$ectively. The'e Standard'have n"t been c"n'idered ("r ad"$ti"n by the I&A,. The 6&A! ha' ad"$ted &a'h ,a'i' IPSAS butha' re(rained (r"m ad"$tin# Accrual ,a'i' IPSAS 91@32:. The 6&A! i' al'" c"mmitted t" im$lementthe ISSAI' in $ublic 'ect"r audit'.

0egal 1 Profeional Statu of Adopted Standard in Banglade"

The &hartered Acc"untant' ,ye@la4' 13 d" n"t c"ntain any $r"vi'i"n ("r mandat"ry c"m$liance "( the ad"$ted 'tandard' by I&A, member'. )ence in the ab'ence "( any br"ad 'tatut"ry "r $r"(e''i"nal reuirement the ad"$ted IAS/IFRS and the ISA are en("rced a' indicative "( #""d

'tandard acc"untin# and auditin# $ractice. The &"uncil I&A, ha' $ri"riti*ed nece''ary amendment "( it' ,ye@la4' in the immediate ("re'eeable (uture t" mandate


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IFRS (= Firt4time Adoption of International Financial Reporting Standard

IFRS 1 4a' i''ued in une 2003 and a$$lie' t" an entity 4h"'e (ir't IFRS (inancial 'tatement' are ("r a $eri"d be#innin# "n "r a(ter 1 anuary 200+. It al'" a$$lie' t" interim (inancial re$"rt'. A (ir't@timead"$ter i' an entity that ("r the (ir't time ma5e' an ex$licit and unre'erved 'tatement that it' #eneral$ur$"'e FS c"m$ly 4ith IFRS. I( a 'et "( IFRS 4a' #iven t" an external $arty in $recedin# year then

the entity 4ill already be c"n'idered t" be "n IFRS and IFRS 1 d"e' n"t a$$ly. Since the I&A, ha'been ad"$tin# the IAS ("r "ver t4" decade' in the ("rm "( nati"nal 'tandard' 9,AS: ,an#lade'hientitie' remained relatively una((ected thr"u#h Fir't Time Ad"$ti"n "( IFRS. The I&A, 4ill c"ntinuead"$tin# the IFRS ("r relevant a$$licati"n in the FS "( re$"rtin# entitie'.

IFRS for SME 4 Ad"$ted E((ective ("r FS be#innin# "n "r a(ter 1 anuary 2013.(() CHA00EN3ES 1 0IMI,A,IONS OF HARMONI6A,ION IN BAN30A2ESH 0imitation to Harmonization

A$$arently there are barrier' t" )arm"ni*ati"n 4hich hinder 'tandardi*ati"n "( acc"untin# and(inancial re$"rtin# $ractice' and "(ten act a' maC"r im$ediment' t" the #l"bali*ati"n $r"ce''. The'e$r"blem' emanate e''entially (r"m di((erence' in (inancial re$"rtin# $ur$"'e' 9("r tax a''e''ment in

'"me c"untrie' and ("r inve'tment deci'i"n' in "ther': le#al 'y'tem' di'c"ura#in# the devel"$ment"( certain acc"untin# $ractice' and re'trictin# the "$ti"n' available> relative im$"rtance "( c"r$"rateu'er #r"u$'> relative need' "( devel"$in# c"untrie' re#ardin# the ad"$ti"n and i''uance "( ba'ic'tandard' "r $rinci$le'> de#ree "( nati"nali'm '"ci"@cultural ec"n"mic devel"$ment "( c"untrie' and'tatu' "( $r"(e''i"nal acc"untancy b"die' "r in'titute' 4hich 4"uld in(luence better 'tandard' ("r #reater harm"ni*ati"n.

The maC"r imitati"n' t" )arm"ni*ati"n Standardi*ati"n may be 'ummari*ed a' ("ll"4'N

The a$$licati"n "( IAS/IFRS d"e' n"t nece''arily (ul(ill the level "( $ublic ex$ectati"n'. The (ir'trule ("r c"m$any acc"unt' i' c"n'trued a' Ocaveat lect"rO@ Klet the reader ta5e careK. It i' "(tenrec5"ned that the a$$licati"n "( IAS i' a $r"mi'e that the $r"(e''i"n cann"t deliver 'ati'(act"rily.The exi'tence "( 'tandard' tend' t" rai'e ex$ectati"n' ab"ut the $reci'i"n and c"m$arability "( c"m$any acc"unt' ab"ve 4hat i' '"metime' $racticably (ea'ible.

ac5 "( 5n"4led#eability and (amiliari*ati"n 4ith Standard' 9IAS/IFRS: "n the $art "( Pre$arer'and Audit"r' "( Financial Statement' t" en'ure $r"$er a$$licati"n "( the Standard' in the$re'entati"n and audit "( (inancial in("rmati"n. Thi' $r"(e''i"nal c"n'traint i' a maC"r 'tumblin#bl"c5O 4hich "(ten im$ede' the $ractical cry'talli*ati"n "( bene(it' (r"m im$lementati"n "( 'tandard' and may even lead t" mi'leadin# vie4' bein# $re'ented by audited (inancialin("rmati"n.

Im$lementati"n "( 'tandard' entail' incremental c"'t' t" re$"rtin# entitie' in en'urin# c"m$liance4ith IAS thr"u#h em$l"yment "( a$$r"$riately uali(ied $er'"nnel ("r $re$arati"n "( FinancialStatement'. Audit (ee' 4"uld al'" be increa'ed ("r en'urin# 'uch c"m$liance 4hich i' "(tenre'ented and even di'c"ntent ("r a$$licati"n "( 'tandard'.

Standard' are "(ten in(lexible and may tend t" 'ti(le inde$endent Cud#ment and $r"hibit

indi#en"u' acc"untin# in dealin# c"nditi"n' 4hich may be $eculiar t" a $articular entity Thi' mayhave an adver'e e((ect "n $r"(e''i"nal devel"$ment re'trictin# acc"untant' and audit"r' t"chec5in# c"m$liance 4ith rule' and di'cl"'ure'.

The extent "( di'cl"'ure "(ten in the n"te' ha' increa'ed #reatly "ver the la't c"u$le "( decade'.8ea'urement a'$ect' c"vered by acc"untin# 'tandard' "( a''et' liabilitie' "r "( $r"(it l"''are "(ten c"m$lex and may be c"ntr"ver'ial thu' a((ectin# re$"rted re'ult'.

&"r$"rate FR are "(ten n"n@c"m$liant 4ith the mandat"ry di'cl"'ure reuirement' a' $er Act'

rule' re#ulati"n' and a$$licable IAS/IFRS by li'ted entitie' are n"t "(ten re$"rted by c"ncernedaudit"r'.

?eci'i"n relevance "( $ubli'hed annual re$"rt' ("r inve'tment credit lendin# and "ther ec"n"mic deci'i"n' i' "(ten c"m$r"mi'ed by 'ub'tantial n"n@c"m$liance by the li'ted c"m$anie'.

There i' "(ten 'ub'tantial variability in di'cl"'ure level' acr"'' vari"u' $art' "( annual re$"rt'.

20 | P a g e


24/35

Inadeuate evaluati"n and m"nit"rin# "( c"r$"rate re$"rt by re#ulat"ry a#encie' 9SE&: and ua'ire#ulat"r 9St"c5 Exchan#e':

A 'ub'tantial $"rti"n "( the c"ncerned c"untry;' ec"n"my i' "ut'ide the $urvie4 "( any 5ind "(

("rmali*ed (inancial re$"rtin# 'tructure let al"ne a$$licati"n "( IAS/IFRS. 8"re"ver the d"minant$ublic 'ect"r' have hithert" been re$"rtin# traditi"nally "ut'ide the ambit "( any IAS/IFRS and are

'till re'ilient t"4ard' a$$licati"n "( 'tandard'. Dnder the $revailin# re#ulat"ry (rame4"r5' there i' a lac5 "( a$$r"$riate m"nit"rin# ("r

im$lementati"n "( the ad"$ted 'tandard'. B"n@c"m$liance 4ith the reuirement' "( a $articular 'tandard i' "(ten n"t re$"rted and di'ci$linary acti"n i' 'eld"m in'tituted.

?e'$ite a $articular 'tandard bein# meticul"u'ly $re$ared and vetted it may 'till be (rau#ht 4ith

'ubCectivity and thereby n"t 'erve the intended $ur$"'e.

,y any 'tandard the audit (ee' in ,an#lade'h are very l"4 c"m$ared t" the re'$"n'ibilitie'inv"lved and the time and e(("rt' reuired t" d" a $r"$er audit C"b. Thi' "bvi"u'ly a((ect' thea$$r"ach and 4"r5 "( the Audit"r 4h"'e $r"(e''i"nal i' al'" hi' '"urce "( inc"me.

There i' "(ten c"ntradicti"n bet4een (inancial re$"rtin# and tax $r"vi'i"n' and $ractice' in anumber "( ca'e' the le#al reuirement' #iven in the &"m$anie' Act/ Tax la4 are in c"ntradicti"n

4ith th"'e "( the $r"(e''i"nal reuirement'.

The im$act "(


25/35

8andat"ry A$$licati"n "( IAS 30 by li'ted ,an5 c"m$anie' have #reatly re't"red (inancialdi'ci$line in the ban5in# 'ect"r hel$in# t" "verc"me l"an de(ault and enhancin# the tran'$arency"( (inancial in("rmati"n and acc"untability "( mana#ement thereby b""'tin# de$"'it"r andinve't"r c"n(idence.

The multinati"nal c"m$anie' 9("rei#n inve't"r': "$eratin# in the re#i"n have c"mmenced a

bu'ine'' dial"#ue 4ith the c"ncerned #"vernment a#encie' ("r 'tandardi*ati"n "( (inancialre$"rtin# $ractice' thr"u#h a$$licati"n "( IAS/IFRS.

The Pr"(e''i"nal In'titute' "( SAAR& are ex$ected t" amend the ,ye@la4' ("r e((ectin#mandat"ry c"m$liance "( the ad"$ted IAS/IFRS by it' member' irre'$ective "( 4hether en#a#ed in $r"(e''i"n 'ervice "r "ther4i'e

There ha' been 'i#ni(icant 'tren#thenin# "( &"r$"rate !"vernance $ractice' $articularly in theban5in# 'ect"r includin# 'uch matter' a' re'tricti"n "n ,"ard c"m$"'iti"n and mandat"ry creditratin# reuirement'

&"r$"rate !"vernance &"de/ !uideline' ("rmulated by the SE& and ,, 9re#ulat"ry (rame4"r5':are bein# mandat"rily im$lemented by all li'ted entitie' 'ince 200%.

The #reatly br"adened mandate ("r credit ratin# by re#ulat"ry a#encie' and ua'i re#ulat"r'@

t"#ether 4ith the im$lementati"n "( ,a'el II in the ban5in# 'ect"r ha' inten'i(ied the nece''ity ("r en'urin# adeuate harm"ni*ati"n "( (inancial re$"rtin# and audit $ractice' in ,an#lade'h.

The I&A, "r#ani*ed ,e't Publi'hed Acc"unt' and Re$"rt' A4ard' and the SAFA ,e't Pre'ented Acc"unt' A4ard' and &"r$"rate !"vernance A4ard' annual c"m$etiti"n 'erve' a' a


26/35

The nati"nal ec"n"my 'h"uld be dynamic 'u'tainable #r"4th "riented and (ree (r"m bureaucraticc"ntr"l'. 8acr"ec"n"mic (undamental' 'uch a' l"4 rate "( in(lati"n and current acc"unt de(icit'table currency c"m("rtable ("rei#n exchan#e re'erve' increa'in# remittance' exchan#ec"nvertibility and ex$"rt #r"4th mu't be en'ured.

!"vernment mu't exerci'e 'tr"n# $"litical 4ill and c"nducive civil admini'trati"n c"mmitment

9mind'et: and a (irm 'en'e "( determinati"n t" ("r#e ahead 4ith $ractical im$lementati"n "( theRe("rm' a#enda ("r im$lementati"n "( de'ired chan#e' in the ec"n"my.

!"vernment' mu't ta5e int" c"#ni*ance the value additi"n rendered by acc"untin# $r"(e''i"nal'and $r"vide them 4ith due rec"#niti"n there"(.

The !"vernment and $ublic mu't ac5n"4led#e that in thi' era "( #l"bali*ati"n Acc"untancy ha'

emer#ed a' the uni(ied lan#ua#e "( bu'ine'' enC"yin# c"mm"nality 4"rld@4ide and that theIAS/IFRS im$act' a $"'itive dimen'i"n t"4ard' the #l"bal harm"ni*ati"n $r"ce''.

The le#al and re#ulat"ry envir"nment 9$articularly &"r$"rate and Securitie' a4': 'h"uld bec"n#enial t" $r"m"te bu'ine'' #r"4th in ,an#lade'h. The c"ncerned Act' and Re#ulati"n''h"uld be duly amended t" reuire all li'ted n"n@li'ted $ublic and tax h"liday' c"m$anie' t"c"m$ly 4ith 'h"uld be m"di(ied in the ("re'eeable (uture t" brin# certain


27/35

The audit (ee' 'h"uld al'" be a$$r"$riately increa'ed 'i#ni(icantly t" adeuately c"m$en'ate ("r the $r"(e''i"nal time ex$erti'e and re'$"n'ibilitie' inv"lved. Thi' 4"uld al'" im$act "n theuality "( (inancial re$"rtin# and audit $ractice'.

The re#i"nal b"die' 'h"uld c"n'tantly educate and devel"$ a4arene'' am"n# their member' 9a'

4ell a' n"n@member' en#a#ed a' $re$arer' "( (inancial 'tatement' "( re$"rtin# entitie': ("r ea'y

under'tandin# inter$retati"n and a$$licati"n "( the ad"$ted IAS/IFRS and ISA thr"u#h relevant$ublicati"n' and re#ular h"ldin# "( c"n(erence' 'eminar' and 4"r5'h"$'.

The re#i"nal In'titute' 'h"uld immediately amend their ,ye@la4' t" en'ure mandat"ry$r"(e''i"nal "b'ervance "( the ad"$ted Standard' by all it' member' irre'$ective "( 4hether en#a#ed in $ractice 'ervice "r bu'ine''.

,"th the Re#ulat"r' and the Pr"(e''i"n 'h"uld $lay an active r"le in en'urin# uality a''urancethr"u#h adeuate m"nit"rin# and en'urin# e((ective c"m$liance "( the $r"vi'i"n' "( la4 (inancialre$"rtin# and auditin# 'tandard'. Punitive acti"n' may be ta5en a#ain't de(aulter'. A4ard' maybe #iven t" ,e't Publi'hed &"r$"rate Re$"rt'. A$$r"$riate vi#ilant mea'ure' 'h"uld be en("rcedby Re#ulat"r'/ Pr"(e''i"n ("r n"n@c"m$liance "( IAS/IFRS and ISA by li'ted entitie' and audit"r'there"( re'$ectively.

!"vernment 'h"uld intr"duce a le#al and re#ulat"ry (rame4"r5 $r"hibitin# c"rru$t $ractice'dealin# (irmly 4ith th"'e 4h" c"mmit them and $r"tectin# th"'e 4h"


28/35

• en'ure adeuate a$$r"$riate im$lementati"n "( it' Strate#ic Plan 200@1+.

• c"n'ider (inali*in# it' &"uncil Re("rm' Re. Inducti"n "( external n"n@elected &"uncil"r' 910:(r"m t"$ "((icial' "( !"vt. 8ini'trie' Re#ulat"r' and "ther a#encie'.

• ad"$t e((ective mea'ure' "n a t"$ $ri"rity ba'i' t" $revent im$"'iti"n "( a 'u$erim$"'edredundant re#ulat"ry "ver'i#ht b"dy li5e the FR& , thr"u#h enactment "( the FRA.

(


29/35

and emanci$ati"n "( "ur $e"$le and thereby c"ntribute t"4ard' the '"ci"@ec"n"mic u$li(tmentleadin# t" "verall devel"$ment $eace $r"#re'' and $r"'$erity "( ,an#lade'h and the re#i"n. 7emu't h"4ever 5ee$ $ace 4ith the e((luxi"n "( time a' "ther4i'e 4e 4"uld be an'4erable t" $"'terity("r "ur acti"n' and attitude'. Ma% A00AH Pro#idence &e our 3uideG

-----------------------------------------------------

APENDIES

Appendi! I "A# - Adoption Status of International Accounting Standards "IAS# byIA$ as $angladesh Accounting Standards "$AS#

IAS%$AS

&itle of Adopted IAS as $AS E'ecti(e Date-Applicable on or

after

) Presentation of !inancial Statements 'an ())** Inentories 'an ())*+ Statement of Cas$ !lows 'an +++, Accounting Policies, C$anges in Accounting Estimates and

Errors 'an ())*

) Eents After t$e Re"orting Period 'an +++)) Construction Contracts 'an +++)* Income -a.es 'an +++). Pro"erty, Plant and E/ui"ment 'an ())*)+ Leases 'an ())*), Reenue 'an ())*)/ Em"loyee Bene0ts 'an ())1* Accounting for 2oernment 2rants and Disclosure of

2ot Assc 'an +++

*) -$e E3ects of C$anges in !oreign E.c$ange Rates 'an ())* *0 Borrowing Costs 'an ())

*1 Related Party Disclosures 'an ())**. Accounting and Re"orting %y Retirement Bene0t Plans 'an ())**+ Consolidated and Se"arate !inancial Statements 'an ())*, Inestments in Associates 'an ())**/ !inancial Re"orting in 4y"erin5ationary Economics 6ot ado"ted0) Interests in 'oint 7entures 'an ())*0* !inancial Instruments8 Presentation 'an ())00 Earnings "er S$are 'an ())* 01 Interim !inancial Re"orting 'an +++0. Im"airment of Assets 'an ())90+ Proisions, Contingent Lia%ilities and Contingent Assets 'an ())*0, Intangi%le Assets 'an ())9 0/ !inancial Instruments8 Recognition and #easurement 'an ())

1 Inestment Pro"erty 'an ())*1) Agriculture 'an ())*

26 | P a g e

http://www.iasb.org/NR/rdonlyres/9DC65C49-ABA2-4718-954A-49775B5C84E6/0/IAS1.pdfhttp://www.iasb.org/NR/rdonlyres/C5EFBA7A-0A61-44F1-85E1-E3D681F0CF9E/0/IAS11.pdfhttp://www.iasb.org/NR/rdonlyres/C6913D1C-1734-4129-9C20-4AEADE76DD21/0/IAS23.pdfhttp://www.iasb.org/NR/rdonlyres/CB968A20-8898-4CF0-8C39-E7D3B331687F/0/IAS24.pdfhttp://www.iasb.org/NR/rdonlyres/2E15F246-850B-4717-987B-50C21C375EF5/0/IAS34.pdfhttp://www.iasb.org/NR/rdonlyres/BCE30C2D-F85E-42B7-ADB6-E91B50F13B39/0/IAS39.pdfhttp://www.iasb.org/NR/rdonlyres/9DC65C49-ABA2-4718-954A-49775B5C84E6/0/IAS1.pdfhttp://www.iasb.org/NR/rdonlyres/C5EFBA7A-0A61-44F1-85E1-E3D681F0CF9E/0/IAS11.pdfhttp://www.iasb.org/NR/rdonlyres/C6913D1C-1734-4129-9C20-4AEADE76DD21/0/IAS23.pdfhttp://www.iasb.org/NR/rdonlyres/CB968A20-8898-4CF0-8C39-E7D3B331687F/0/IAS24.pdfhttp://www.iasb.org/NR/rdonlyres/2E15F246-850B-4717-987B-50C21C375EF5/0/IAS34.pdfhttp://www.iasb.org/NR/rdonlyres/BCE30C2D-F85E-42B7-ADB6-E91B50F13B39/0/IAS39.pdf


30/35

Appendi! I "$# - Adoption Status of International Financial Reporting Standards"IFRS# by IA$ as $angladesh Financial Reporting Standards "$FRS#

S23

IFRS %$FRS

&itle of Adopted IFRS as $FRS E'ecti(eDate-

Applicable onor after

: $FRS ) !irst;time Ado"tion of I!RS 'an ())+

(: $FRS * S$are;%ased Payment 'an ())*


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)46 9)) Audit Eidence

).6 9) Audit EidenceJS"eci0c Considerations for Selected Items

)+6 9)9 E.ternal Con0rmations

),6 9) Initial Audit EngagementsJ="ening Balances

)/6 9() Analytical Procedures

*6 9)) S"ecial ConsiderationsJAudits of 2rou" !S @including ork of Com"onent Auditors

*+6 >) Hsing t$e ork of Internal Auditors

*,6 >() Hsing t$e ork of an Auditors E."ert

*/6 *)) !orming an ="inion and Re"orting on !inancial Statements

06 *)9 #odi0cations to t$e ="inion in t$e Inde"endent Auditors Re"ort

0)6 *)> Em"$asis of #atter Paragra"$s and =t$er #atter Paragra"$s in t$e Inde"endentAuditors Re"ort

0*6 *) Com"aratie InformationJCorres"onding !igures and Com"aratie !S

006 *() -$e Auditors Res"onsi%ilities Relating to =t$er Information in Documents ContainingAudited !S

016 ?)) S"ecial ConsiderationsJAudits of !S Pre"ared in Accordance wit$ S"ecial Pur"ose!rameworks

046 ?)9 S"ecial Considerations Audits of Single !S and S"eci0c Elements, Accounts or Itemsof !S

0.6 ?) Engagements to Re"ort on Summary !inancial Statements

-otal BSA Code of Et$ics BSFC !ramework

Appendi! II "$# - Adoption Status of International Auditing Practice Statements"IAP by IA$ as $angladesh Auditing Practice Statements "$APS#

Sl63

IAPS %$APS

$APS &itle

)6 ))) Inter;Bank Con0rmation Procedures

*6 ))1 -$e Relations$i" Between Banking Su"erisors and Banks E.ternal Auditors

06 ))9 -$e S"ecial Considerations in t$e Audit of Small Entities@wit$drawn in ())

16 ))> Audits of t$e !inancial Statements of t$e Banks

46 )) -$e Consideration of Enironmental #atters in Audit of !inancial Statements

.6 )( Auditing Deriatie !inancial Statements

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http://www.iasb.org/NR/rdonlyres/9DC65C49-ABA2-4718-954A-49775B5C84E6/0/IAS1.pdfhttp://www.iasb.org/NR/rdonlyres/9DC65C49-ABA2-4718-954A-49775B5C84E6/0/IAS1.pdf


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+6 )< Electronic Commerce;E3ect on t$e Audit of !inancial Statements

,6 )1 Re"orting %y Auditors on Com"liance wit$ I!RS @wit$drawn in ())

Appendi! III - International Public Sector Accounting Standards "IPSAS# *))"Not Adopted by IA$#

ash $asis IPSAS7Financial Reporting 8nder the ash $asis of Accounting

IPSAS JPresentation of !inancial Statements

IPSAS (JCas$ !low Statements

IPSAS JConsolidated and Se"arate !inancial Statements

IPSAS *JInestments in Associates

IPSAS ?JInterests in 'oint 7entures

IPSAS +JReenue from E.c$ange -ransactions

IPSAS )J!inancial Re"orting in 4y"erin5ationary Economies

IPSAS JConstruction Contracts

IPSAS (JInentories

IPSAS


33/35

ISSAI () Agreeing t$e -erms of Audit EngagementsISSAI (() Fuality Control for an Audit of !inancial StatementsISSAI ()) S"ecial Considerations Audits of 2rou" !inancial Statements @Incl: ork of

Com"onent AuditorsISSAI >) Hsing t$e ork of Internal AuditorsISSAI >() Hsing t$e ork of an Auditors E."ertISSAI *)) !orming an ="inion and Re"orting on !inancial StatementsISSAI *)9 #odi0cations to t$e ="inion in t$e Inde"endent Auditors Re"ortISSAI *)> Em"$asis of #atter Paragra"$s and =t$er #atter Paragra"$s in Inde"endent

Auditors Re"ort

ISSAI *) Com"aratie Information Corres"onding !igures and Com"aratie !inancialStatements

ISSAI *() -$e Auditors Res"onsi%ilities Relating to =t$er Information in Documents ContainingAudited !S

ISSAI ?)) S"ecial Considerations Audits of !S Pre"ared in Accordance wit$ S"ecial Pur"ose!rameworks

ISSAI ?)9 S"ecial Considerations Audits of Single !St and S"eci0c Elements, Accounts orItems of !S

AR:N=5S % A$$RE9IA&I:NS

ADB ; Asian Deelo"ment BankAP ; Audit PracticesBAPS ; Banglades$ Audit Practice StatementsBAS ; Banglades$ Accounting StandardsBB ; Banglades$ BankB!RS ; Banglades$ !inancial Re"orting StandardsBSA ; Banglades$ Standards on AuditingCA2 ; Com"troller and Auditor 2eneralCAPA ; Confederation of Asian and Paci0c AccountsC!AA ; Country !inancial Accounta%ility AssessmentC2A ; Controller 2eneral of AccountsCIDA ; Canadian International Deelo"ment AgencyCPD ; Continuing Professional Deelo"mentD!ID ; De"artment for International Deelo"mentDSE ; D$aka Stock E.c$ange

EDC ; Euroone De%t Crisis!ASB ; !ederal Accounting Standards Board

30 | P a g e


34/35

!EE ; !ederation Euro"ean Encom"ata%les!R ; !inancial Re"orting!RA ; !inancial Re"orting Act!RC ; !inancial Re"orting Council!S ; !inancial Statements2AAP ; 2enerally Acce"ted Accounting Princi"les2A= ; 2oernment Accounta%ility =Mce

2A-S ; 2eneral Agreement on -rade in Serices2A-- ; 2eneral Agreement on -ari3s and -rades2!C ; 2lo%al !inancial Crisis4!R&AP ; 4armoniation of !inancial Re"orting and Audit PracticesIAASB ; International Auditing and Assurance Standards BoardIAPS ; International Audit Practice StatementsIAS ; International Accounting StandardIASB ; International Accounting Standards BoardICAB ; Institute of C$artered Accountants of Banglades$IC#AB ; Institute of Cost and #anagement and Accountants of Banglades$IES ; International Educational StandardsI!AC ; International !ederation of AccountantsI!RIC ; International !inancial Re"orting Inter"retations CommitteeI!RS ; International !inancial Re"orting Standards

I#! ; International #onitory !undI6-=SAI International =rganiation of Su"reme Audit InstitutionsI=SC= ; International =rganiation of Securities CommissionsIPSAS ; International Pu%lic Sector Accounting StandardsIPSASB ; International Pu%lic Sector Accounting Standards BoardISA ; International Standards on AuditingISAR ; International Standards on Accounting and Re"ortingISSAIs ; -$e International Standards of Su"reme Audit Institutions#!I ; #icro !inance Institutions6BR ; 6ational Board of Reenue62= ; 6on 2oernment =rganiation6NSE ; 6ew Nork Stock E.c$ange=CA2 ; =Mce of t$e Com"troller and Auditor 2eneralPPP ; Pu%lic Priate Partners$i"

PS!# ; Pu%lic Sector !inancial #anagementSA!A ; Sout$ Asian !ederation of AccountantsSA!A ; Sout$ Asian federation of AccountantsSAI ; Su"reme Audit InstitutionsSEC ; Securities and E.c$ange CommissionSEC ; Security E.c$ange CommissionSER ; Securities and E.c$ange RulesS#E ; Small and #edium Enter"risesS#= ; Statement of #em%ers$i" =%ligationsH6 ; Hnited 6ationsH6C-AD ; Hnited 6ations Conference on -rade and Deelo"mentB ; orld Bank-= ; orld -rade =rganiation

REFERENES

: Presentation of Banglades$ Pers"ecties of IASI!RS to Standard Setters @IASB SA!A Conference ; Anwaruddin C$owd$ury @())>(: I!RS =eriew, Ado"tion and Im"lementation Status, C$allenges and !uture

Dimensions; ICAB Seminar ; Anwaruddin C$owd$ury @())>


35/35

; IAS Plus:com we% "ortal?: Strengt$ening Banglades$ Pu%lic Sector Accounting & Auditing 2lo%al Reforms and

-$e ay !orward8 ICAB;CAPA International Conference ()( Anwaruddin C$owd$ury @()(

OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO