For uniform good standards in accounting
Monday, 10 December 2007
The Finance Adviser has stressed the point of good auditing practices -- which are synonymous with sound accounting practices -- to attain good corporate governance. The Adviser commented, thus, at a function of the Institute of Chartered Accountants (ICAB) last Saturday. The Adviser's prescription is no doubt at the core of achieving better corporate governance but the same also has wider implications for the gamut of economic activities. It also has consequences for governmental expenditures, whether these are efficient and cost-effective. Accountants employed to rate or rank companies for their present and potential value, if they do a good and honest job, can guide the vital investment activities on proper lines ensuring the safety of the investors' funds. Discovery of gross overvaluation done through unscrupulous or shoddy accounting has in the recent past led to the collapse of certain companies in spectacular speed in some of the most developed economics, with the attendant ruin of the capital of those who invested in the shares of such companies. The standard of accounting, in all cases, need, thereof, to be high for the well-being of the financial sectors and the growth of the economy.
The Institute of Chartered Accountants of Bangladesh (ICAB) was founded thirty years ago and it reflects that the study of accounting as a discipline and professionals created from pursuing accounting studies, have a long history in this country. Indeed, there are many chartered accountants to be found in Bangladesh who had taken their degrees from prestigious foreign institutions mainly from the UK. International standard accountants are available in Bangladesh to undertake various complex accounting tasks, including the vital ones of auditing, with full competence. Many of them are discharging their services with efficiency and high integrity. But allegations are also made about the not dedicated ones in the profession who are prone to compromising their professional ethics to serve the interests of their clients.
There were charges against some accounting firms for auditing the assets and liabilities of companies before these floated shares in the capital market to raise capital from members of the public, for hiding the weak points of such companies and highlighting only their supposed strong points. This manipulation could successfully persuade ordinary buyers of shares to invest their money in these companies for them to only face distresses later on as the share values of such companies declined substantially. Clearly, auditing standards must improve to a higher degree and uniformly in all cases for the capital market to grow and to consolidate its gains.
Meanwhile, the government is still the biggest spender in the Bangladesh economy notwithstanding that the private sector has developed quite a lot over the years. The accountants have a singularly important role to detect misuse of resources in government offices, to stop such misuse from their detection. They have a great deal of responsibility about creating such conditions of accountability and transparency in the government's accounting and auditing functions that all public spending can be subjected to the rigours of financial discipline to get value from the same.
The economy will no doubt benefit from well-laid standards of accounting. But the standards have not been fully laid and this is a challenge waiting to be overcome. Accounting standards of an international level are no doubt practised in many business establishments of Bangladesh. But there is also the other side in many other business organisations not having accounting systems in place consistent with the international standard. The challenge, therefore, is to achieve uniform accounting standards in all or nearly all business organisations in the country or the elevation of accounting standards where the same is clearly lacking. This is also the recommendation of the Institute of Chartered Accountants of Bangladesh (ICAB). Notably, the ICAB has produced a manual, the Bangladesh Accounting Standards (BAS) long ago. This should be strictly followed by all concerned.
The Institute of Chartered Accountants of Bangladesh (ICAB) was founded thirty years ago and it reflects that the study of accounting as a discipline and professionals created from pursuing accounting studies, have a long history in this country. Indeed, there are many chartered accountants to be found in Bangladesh who had taken their degrees from prestigious foreign institutions mainly from the UK. International standard accountants are available in Bangladesh to undertake various complex accounting tasks, including the vital ones of auditing, with full competence. Many of them are discharging their services with efficiency and high integrity. But allegations are also made about the not dedicated ones in the profession who are prone to compromising their professional ethics to serve the interests of their clients.
There were charges against some accounting firms for auditing the assets and liabilities of companies before these floated shares in the capital market to raise capital from members of the public, for hiding the weak points of such companies and highlighting only their supposed strong points. This manipulation could successfully persuade ordinary buyers of shares to invest their money in these companies for them to only face distresses later on as the share values of such companies declined substantially. Clearly, auditing standards must improve to a higher degree and uniformly in all cases for the capital market to grow and to consolidate its gains.
Meanwhile, the government is still the biggest spender in the Bangladesh economy notwithstanding that the private sector has developed quite a lot over the years. The accountants have a singularly important role to detect misuse of resources in government offices, to stop such misuse from their detection. They have a great deal of responsibility about creating such conditions of accountability and transparency in the government's accounting and auditing functions that all public spending can be subjected to the rigours of financial discipline to get value from the same.
The economy will no doubt benefit from well-laid standards of accounting. But the standards have not been fully laid and this is a challenge waiting to be overcome. Accounting standards of an international level are no doubt practised in many business establishments of Bangladesh. But there is also the other side in many other business organisations not having accounting systems in place consistent with the international standard. The challenge, therefore, is to achieve uniform accounting standards in all or nearly all business organisations in the country or the elevation of accounting standards where the same is clearly lacking. This is also the recommendation of the Institute of Chartered Accountants of Bangladesh (ICAB). Notably, the ICAB has produced a manual, the Bangladesh Accounting Standards (BAS) long ago. This should be strictly followed by all concerned.