The government is now in the midst of a process to introduce the Financial Reporting Act (FRA). In fact, it has been dragging its feet on the enactment of the law following opposition to certain provisions of the draft FRA from the Bangladesh Institute of Chartered Accountants (ICAB), an association of professional Chartered Accountants (CAs). There is nothing unusual on the part of the professional body of the auditors to oppose something that would hurt the interests of its members. It is important for the government to hold discussions with all stakeholders on the proposed law.
The moot issue for consideration here is to ensure the quality of audit jobs done by the CA firms in Bangladesh. This issue came up for discussion yet again at a recently-held seminar in Dhaka. As expected most discussants there expressed their dissatisfaction at the overall quality of audit reports and laid emphasis on ensuring the ethical standard on the part of the local CA firms. However, the concern about the quality of the audit job, notwithstanding its validity on a number of counts, would not go well with the professional auditors.
The firms that maintain integrity and ethical standard in their jobs have justified reasons to develop an aggrieved feeling if someone raises wholesale allegation. Since a section of CA firms is being accused of helping some companies to prepare, what are termed, doctored financial reports which do, at times, mislead others concerned, it has become important to fathom the extent of the rot. It could be that such allegations are exaggerated. But the claim made by an incumbent commissioner of the Bangladesh Securities and Exchange Commission (BSEC) at the seminar that the securities regulator was not getting due support from the CA firms would tend to give credence to the allegation.
Under the circumstances, some participants at the event suggested 'autopsy' on the entire accounting system in the corporate world. This seems to be a sensible suggestion. Bangladesh is a country where allegations and dissatisfaction are found aplenty at every place. But enough research is not done to know the truth. Often rash decisions are made without knowing the truth. Since audit of the financials of companies, private or public, remains an important job in the context of the overall economy, there should be sincere efforts to know the actual state of affairs through proper audit work in the country.
On its part, the government will be better equipped to hold discussions with all stakeholders, if it can gather the right kind of information about the quality of audit work and also about the CA firms that allegedly work hand in glove with some unscrupulous companies. Such information can only be collected through a dispassionate and thorough probe into allegations of wrongdoings against the auditors by independent and qualified experts. It would be hard to oppose a provision of the proposed act if the government can cite sufficient and justified reasons for incorporating it.