The Institute of Chartered Accountants of Bangladesh (ICAB) has said that the contents of a news item under the headline of "Drafting laws bypassing FRC: Regulator Lodges Complaint against Accountancy Bodies" published on August 21, 2022 in the Financial Express were "untrue", "misleading and "biased".
The ICAB said it in a rejoinder received on Wednesday.
It said the ICAB is an autonomous body established by the Father of the Nation Bangabandhu Sheikh Mujibur Rahman under the Bangladesh Chartered Accountants Order, 1973 (President's Order No. 2 of 1973) for the purpose of regulating the profession of accountants and for matters connected therewith.
The preamble of the said Order emphatically stated the very purpose of promulgation of the said Order and unequivocally states that ICAB is the regulator of the professional accountants and hence, there should not be any doubt about it. But the tone of the report referring to an Executive Director of Financial Reporting Council (FRC) is absolutely misleading, unlawful and clear reflection of his misreading and misunderstanding.
At the beginning, the report reads as "The Financial Reporting Council (FRC), Bangladesh has lodged a complaint to the authorities concerned that some accountancy bodies of the government were bypassing it (FRC) in preparing laws, rules, and standards", which is "untrue" and "misleading".
It is pertinent to note that the Bangladesh Chartered Accountants Order, 1973 will not be repealed or replaced by any new Act as decided by the Office of the Honorable Prime Minister of the People's Republic of Bangladesh since this Order was passed by the Father of the Nation. Therefore, there is no question of preparing any laws, rules, standards as mentioned in the report at this stage. The actual fact is that the Ministry of Commerce, (MoC), Government of Bangladesh as the parent ministry, asked for the Bengali version of the said Order with necessary modification and ICAB has submitted the same to MOC in pursuance of such request.
ICAB is an autonomous body under the MOC whereas Financial Reporting Council (FRC) is under Ministry of Finance (MOF), Government of Bangladesh and there is no hierarchical reporting responsibility on ICAB to report to FRC. Furthermore, there is no provision in Financial Reporting Act (FRA) 2015 or any other legislation or order that requires ICAB to report to FRC or take its approval prior to submission of any document to its parent ministry, i.e.(MOC). In view of the above, FRC's complaint (if any) seems to have been made on a misunderstanding and misstatement of the applicable laws and regulations and any such Complaint is an encroachment of its domain. However, since FRC has raised the matter with MOC, ICAB believes its parent ministry, MOC will take necessary measures or react to such Complaint, as it deems fit and proper.
It is also wrongly stated in the report that "The FRC was formed in light of the recommendations placed after the capital market debacle in 2010 as there were many allegations against the auditing firms about manipulating financial statements". This is a clear representation of lack of proper insightful information and the abrupt comment made against the auditing firms which is very objectionable for the reasons that-
the first draft of the Financial Reporting Act was issued in 2006 and the idea of having a body like FRC first came in the "Report on the Observance and Codes (ROSC) Bangladesh: Accounting and Auditing" issued by the World Bank on May 16, 2003 where it was mentioned that "an independent oversight body - Financial Reporting Council-FRC should be established". Further to be noted that, the first gazette of Financial Reporting Act was issued on 30 December 2008. Hence, the claim of the formation of FRC after the capital market debacle and those abrupt allegations against the auditing firms, is clearly a misstatement and is highly objectionable. Therefore, ICAB as the regulator of professional accountants, asks for a clear and unambiguous explanation for such abrupt comments.
Referring to Mr. Md Sayeed Ahmed, an executive director of the FRC, the report stated that "FRC is the regulator of all accountants and auditors of Bangladesh" which is clear example of the lack of understanding of the applicable laws and is a sheer disregard to the Bangladesh Chartered Accountants Order, 1973 (President's Order No. 2 of 1973) promulgated by the Father of the Nation Bangabandhu Sheikh Mujibur Rahman inasmuch as the preamble of the said Order emphatically stated the very purpose of promulgation of the said Order and which unequivocally states that ICAB is the regulator of the professional accountants in Bangladesh.
The report also stated that," Earlier there was no regulator to monitor the activities of the auditors in the country" which is false and clear reflection of the ignorance of the existing legal framework relating to audit practice in Bangladesh. As elaborated and for the reasons stated hereinabove including that the Bangladesh Chartered Accountants Order 1973 provides that ICAB is the regulator of the profession of accountants and for the matters connected therewith. The statement made in the Report is also untrue for the reasons that the aim of establishing FRC was to ensure transparency of financial reporting of the public interest entities and nowhere, in the Financial Reporting Act, 2015, FRC was ornated to be the 'Regulator' of the accountants and auditors in Bangladesh.
The above statement made in the report seems to be an overstatement of the roles of FRC and at the same time, an understatement of the functions and role of ICAB ignoring the Bangladesh Chartered Accountants Order, 1973 and the Financial Reporting Act 2015.
The report also stated that, "FRC has sole authority to look after the professional accountancy institutions in Bangladesh" and "The professional accountancy bodies, for example the ICAB and ICMAB, will work under the monitoring and supervision of the regulatory body" i.e., FRC. For the reasons stated hereinabove, these statements are "false" and "misconceived".
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