Confusion over accounting standards

It was really very surprising for two proposals in the Finance Bill 2014 treating Cost and Management Accountant (CMA) as auditor of financial statements for tax purpose and distinguishing Bangladesh Accounting Standards (BAS) and Bangladesh Financial Reporting Standards (BFRS) as two separate standards.

The first one is barred by laws and the second one is absolutely a wrong concept.  The first one has been deleted considering the legal barrier of the Companies Act 1994, the Securities & Exchange Commission Rules 187 and 'The Cost & Management Accountants of Bangladesh Ordinance 1977'. As it was deleted, we will not go to explain it. The second one of conceptual conflict between BAS and BFRS has been legalised by the Finance Act 2014.

 Let us see the language of the Finance Act 2014 on BAS and BFRS. Clause 13 of the Finance Bill 2014 has amended section 35(3) inserting: "Certified by a chartered accountant to the effect that the accounts are maintained according to Bangladesh Accounting Standards (BAS) and reported in accordance with Bangladesh Financial Reporting Standard (BFRS)". Clause 46 of the proposed Finance Bill has amended the same wordings on BAS and BFRS. The interpretation of the language has been made as per BAS and reported as per BFRS which is absolutely incorrect.  

In a true sense, BAS and BFRS are no different. They are the same but under different names. Clause 7 under 'Definition' of BAS-1 that has defined BFRS says: "Bangladesh Financial Reporting Standards (BFRSs) are standards and interpretations adopted by the Institute of Chartered Accountant of Bangladesh (ICAB). They comprise: (a) Bangladesh Financial Reporting Standards; (b) Bangladesh Accounting Standards; and (c) Interpretations." 'Defined terms' under Appendix A of BFRS-1 defines the BFRS as the same as above. Both BAS and BFRS have been adopted from the International Accounting Standards (IAS) and the International Financial Reporting Standards (IFRS).

The International Accounting Standard Committee (IASC) issued 41 IAS from 1973 to 31 March 2001. On 01 April, 2001, the International Accounting Standard Board (IASB) took over responsibility of IASC and started to issue IFRS recognising all IASs as part of IFRS. So fundamentally, there is no difference between IAS and IFRS, and in the same way, between BAS and BFRS. When the Finance Act was drafted, the issue could have been discussed with the Institute of Chartered Accountants of Bangladesh (ICAB) and finalised accordingly.

There is no scope to interpret its name as if BAS is for accounting, and BFRS is for reporting. We believe considering this wrong interpretation, the language in the proposed Finance Bill was used to maintain account as per BAS and to report as per BFRS. Such incorrect insertion as to accounting standard in law gives a wrong understanding of BAS and BFRS and will undermine the image of our accounting profession.

Considering the conceptually defined terms as stated above, the insertion in law could be revised as: "Certified by a chartered accountant to the effect that the accounts are maintained and reported in accordance with Bangladesh Accounting Standards (BAS) and Bangladesh Financial Reporting Standard (BFRS)".

The writer is an Associate Member of ICAB and Head of Finance of Venture Investment Partners Bangladesh Ltd. (VIPB). roy_dipok@yahoo.com