Regulators under-strength, constrained by resources

Mohammad Ali | Published: February 26, 2015 00:00:00 | Updated: November 30, 2024 06:01:00

A World Bank study has identified the weaknesses of six key regulatory bodies in dealing with audited financial statements of their affiliates.
The study has pointed out that the regulators lack the required resources and capacity to ensure the affiliated entities' compliance with relevant regulations and standards in preparing their audited financial statements.
The regulators are the Registrar of Joint Stock Companies and Firms (RJSC), Bangladesh Securities and Exchange Commission (BSEC), Bangladesh Bank (BB), Insurance Development and Regulatory Authority (IDRA), Institute of Chartered Accountants of Bangladesh (ICAB) and the Monitoring Cell of the ministry of finance (MoF).
The study titled 'Bangladesh: Report on the Observance of Standards and Codes- Accounting and Auditing (ROSC- A&A)' has identified poor coordination among the regulatory bodies in respect of making corporations compliant with the necessary auditing standards and requirements.
The findings were revealed recently amid the public perception that the poor quality of audited financial statements, in many cases, was leading to irregularities in the corporate sector.
The study was prepared at the request of the Ministry of Commerce. The WB prepared a similar report in 2003 also.
The WB report, however, made a number of recommendations including enhancing capacity of all the six regulatory entities so that they can identify weaknesses and take corrective action over any non-compliance with financial reporting requirements.
The report is aimed to assist the government in determining reform measures, which are required to further strengthen the country's accounting and auditing practices and enhance financial transparency.
Thus, it will finally help improve business environment and investor confidence and ensure sustainable economic growth, states the 57-page WB report.
To address the weaknesses, the report made some policy recommendations including inclusion of clear and separate audit standards for small, medium and large corporate bodies in the Companies Act and improving the level of education and training in the sector.
All the regulators, it recommended, should enter into a Memorandum of Understanding (MoU) to cooperate for effective monitoring and enforcement of financial reporting requirements.
The report also suggested two options for the government regarding formation of an oversight body to monitor the accountancy and auditing practices.
About the 2003 recommendations, it said that except the initiatives of ICAB and BSEC, no other steps were taken to strengthen the other regulatory bodies.
The study was conducted by the WB team led by Suraiya Zannath, senior financial management specialist, Global Governance Office of Director (GGODR), from March 1 to June 30, 2014.
The ROSC A&A programme is a part of a 12-module joint World Bank-IMF initiative to assist member-countries in strengthening their financial systems by improving their capacity to comply with internationally recognised standards and codes. Â Â Â
md.ali.du@gmail.com