Fresh row over inclusion of CMAs as \\\'professional accountants\\\' in FRA

Fresh row mainly over inclusion of Cost and Management Accountants (CMAs) as 'professional accountants' in the proposed Financial Reporting Act (FRA) has surfaced just before its passage, raising concern about further delay in enacting the law.
A parliamentary standing committee made some recommendations, including changes in definition of professional accountant, and placed the bill before the Jatiya Sangsad recently, triggering protests from Chartered Accountants (CAs).
Under the much-talked-about law, a separate regulatory body -- Financial Reporting Council (FRC) -- will be constituted to regulate the auditing sector, which significantly matters to check financial irregularities, a big concern in the country.
The Institute of Chartered Accountants of Bangladesh (ICAB), in an advertisement published in different dailies, raised a six-point objection to the standing committee's recommendations.
While, ruling out the objections, the Institute of Cost and Management Accountants of Bangladesh (ICMAB) said that the recommendations were made rightly and wisely.
As per one of the recommendations, 'Professional Accountant' means members of both ICAB and ICMAB, and their working sectors will be "financial audit" and "cost and management audit" respectively.
"Inclusion of CMAs in the purview of FRA, and permission to them for cost and management audit under this act is illogical and unexpected," said the ICAB.
"There is nothing about 'management audit' in the existing legal provisions. The management of a company can appoint anybody for management audit," ICAB president Masih Malik Chowdhury told the FE.
"The CMAs can do 'cost audit' in some government institutions, if they (institutions) want; such audit is not compulsory. But our (CA) audit of financial statement is mandatory," he said.
Referring to section 212 of the Companies Act and Bangladesh Chartered Accountants Order-1973, he further said that both 'professional accountant' and 'auditor' mean 'CA'.
ICMAB president Abu Sayed Md Shaykhul Islam, FCMA said that the CAs wrongly perceived the relevant provisions of FRA, because it, in fact, did not allow the CMAs to do the auditing function.
"Though the professional functions of CMAs will not be under the regulation of FRC, we do the job of cost audit (in a limited scale). So, such definitions in a Parliament act should include the CMAs (as cost auditor)…."
"You cannot change your name (when you write it). The government wisely included the CMAs in the definition of professional accountants considering the greater viewpoint of the auditing sector," Mr Islam said.
"We will not do their job (audit of financial statement)," he said, adding that exclusion of CMAs in the definition of 'professional accountant' at a parliament act will cause creation of identity crisis of the professionals.
Citing section 220 of Companies Act in Bangladesh, section 233-B of Companies Act in India and section 258 of Companies Ordinance in Pakistan, Mr Islam said, "Though the cost audit is there not only in Bangladesh, but also in India and Pakistan, they (CAs) falsely termed the 'cost and management audit' as anti-international customs."
The recommendations also stated that 'Professional Accountancy Institution' means both the ICAB and the ICMAB.
ICAB's another objection is that section 62(Ga) of FRA proposed amendment to section 212 of Companies Act requiring the CAs to obtain audit certificate from FRC, but the parliamentary standing committee did not make any such recommendation for CMAs.
Responding to this, Mr Islam said such amendment for CMAs is not related to the proposed FRA, as their functions are not under the purview of the act.
"Amendment is a continuous process; if such amendment is made later, we will accept it," the ICMAB president added.
However, both the ICAB and the ICMAB agreed that any person at the 12-member FRC should be liable to be removed in case of their relevant incapability, failure and disqualification etc.
As per the recommendations of parliamentary standing committee on the ministry of finance, only five of the 12 persons might be removed for those reasons. These five persons include the ICAB president but not ICMAB president.
The ICMAB president further said, "Nowhere of the present world, the monopoly is encouraged, rather it is prevented. So, the ICAB should come out from the monopolistic mentality under the protection of law."
He also suggested that the CAs should have their mentality to work in the competitive environment.
Other objections of the ICAB include absence of definition of 'financial report' and 'financial reporting' in the proposed FRA though the law is being made for this purpose.
Some critics said that the ICAB's move is to create an obstacle to passing the FRA in the parliament.
The issue of enacting FRA came to light after a World Bank (WB) report titled "Bangladesh: Report on the Observance of Standards and Codes - Accounting and Auditing (ROSC A&A)" recommended for it in 2003 to bring the auditing sector in a properly regulated structure.
However, the WB's follow-up report late last year recommended strengthening other regulatory bodies to deal with the audited financial statements to get expected outcome from the proposed FRC.
The regulatory bodies include Bangladesh Bank, Bangladesh Securities and Exchange Commission (BSEC), National Board of Revenue (NBR) and Office of the Registrar of Joint Stock Companies and Firms (RJSC).
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