Around 70 per cent of companies allegedly cook their books to evade payment of right amount of taxes to the government.
Besides causing loss of revenue to the government, analysts say, such unscrupulous practice corrupts corporate governance and culture.
Officials and experts say such manipulation is done for lax scrutiny and poor oversight function on the part of taxmen-be it wilful or for lack capacity.
According to them, the audit firms certify financial statements of nearly 14,000 companies operating in Bangladesh, while the National Board of Revenue (NBR) receives such reports from some 55,000 annually.
Both the NBR and the Institute of Chartered Accountants of Bangladesh (ICAB) are unaware of authenticity of the financials not prepared by audit firms, the sources said.
There is, actually, no effective mechanism to verify these reports.
Submission of such a large number of financial statements not audited by genuine audit firms, experts said, is not only causing a significant amount of revenue loss to the public exchequer but also impeding good governance in the corporate sector.
Besides, such malpractice also widens room for financial irregularities in company operations, they said.
According to data available with the NBR, 51,443 companies submitted their audited accounts, along with income tax returns, to the board in the fiscal year (FY) 2011-12.
The number was 61,988 in the FY 2010-11 and 53,591 in 2009-10.
"Our CA firms, on an average, audit 14,000 financial statements yearly," ICAB president Masih Malik Chowdhury FCA told the FE.
Preferring not to be named, some incumbent and former high officials of the NBR admitted the unfair practice by some unscrupulous companies and other quarters concerned.
Like attesting photographs and certificates by students themselves in the name of gazetted officers for job application, one of them alleged, many financial statements are, unfortunately, attested by a section of dishonest companies, income-tax practitioners (ITPs) and chartered accountants (CAs) with readymade seals and fake signatures.
"It's a reality," he said to shed some light on the entire spectrum of country's underdeveloped taxation system.
Some of such fake reports were also detected earlier by the ICAB when the NBR had sent those to it for checking their authenticity, officials of both the agencies said.
Citing very limited manpower at the revenue board to scrutinise the big load of audit reports, they laid stress on enhancing the NBR capacity to address the problem.
An official also recommended the soonest possible development of a mechanism like database of auditors' electronic signatures so that relevant regulatory bodies, especially the Bangladesh Bank, securities regulator and the NBR could use it to easily check authenticity of the audited reports.
Agreeing on this suggestion, ICAB president Mr Chowdhury said, "Taking the issue into our consideration, we have, in the meantime, started creating such a database to address the problem."
He, however, couldn't specify the timeframe to complete the work.
"ICAB will be happy to provide any sort of cooperation to this end, if the revenue board wants," Mr Chowdhury said.
A high official of the ICAB, however, alleged that some corrupt officials of the companies, in connivance with a section of ITPs, might prepare such doctored audit reports by duplicating the auditors' signatures and seals.
Some "dishonest" NBR employees might also have been involved in the unfair practice, he added.
"It is the responsibility of the NBR to properly scrutinise the audit reports and detect the fake ones for the sake of ensuring transparency in the accountancy practice and the corporate sector," said the official, seeking anonymity.
Terming it a serious threat to the country's corporate governance and financial discipline, a former chairman of the NBR called for urgent attention of the revenue board and other relevant regulatory bodies to prevent auditing malpractice.
When asked, Advocate Md Mazam Ali Khan, president of Dhaka Taxes Bar Association, said, "I don't know whether any legal professionals are involved in such fake audit certification process."
He adds: "Maybe, there are some peons, clerks or the like engaged in it…"
A former NBR member, however, estimated that the number of companies that submitted tax returns in the respective FY might be around 30,000, not 55,000.
To dispel confusion, an official of NBR's statistics wing confirmed that as the department concerned provided data to this wing, only those companies which submitted returns and paid tax were calculated here.
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