Revision needed to avoid conflict with law

The Financial Express in its June 23, 2014 issue published an article by Muzaffar Ahmed under the heading, "Finance Bill 2014: A pragmatic step towards financial discipline". The article has tried to support the empowering of the cost and management accountants (CMA) to audit, alongside chartered accountants, which has been proposed through the amendment of some sections of Income Tax Ordinance 1984 by the Finance Bill 2014. In support of such empowerment some issues have been emphasised. One is monopolising auditing functions and some certifications and special auditing capacity of cost and management accountants (CMAs) in other countries of the world. But we will have to keep in mind that audit activity is not like a commodity which is available in different haats and bazars and which, if supplied by a single supplier may have a scope of supplying bad product, and then other suppliers may be allowed to supply it to overcome the situation. Auditing is a professional service which is provided by the Chartered Accountants.
It is worthwhile to mention that the Institute of Chartered Accountants of Bangladesh (ICAB) and the Institute of Cost and Management Accountants of Bangladesh (ICMAB) have been established at different times with different objectives. The Institute of Chartered Accountants of Bangladesh was established under the Bangladesh Chartered Accountants Order, 1973 (Presidential Order No. 2 of 1973) for the purpose of regulating the profession of chartered accountants. This  clearly identifies the chartered accountants to be the professionals qualified  to render the service of auditing or verifying financial transactions, books, accounts, records, financial statements and financial accounting to the public as accountants. They will also render professional services regarding matters of accounting methods, systems, and techniques including management consultancy services.
On the other hand, as per the contents of Cost and Management Accountants Ordinance 1977 (herein after referred to as CMA Ordinance 1977), the Institute of Cost and Management Accountants (ICMA) of Bangladesh was constituted to regulate the profession of Cost and Management Accountants. Again as per section 2(2) of the said ordinance a member of the ICMAB shall be deemed to be in practice when he: engages himself in the practice of cost and management accounting; or offers to perform services involving the costing or pricing of goods or services, or the preparation, verification or certification of cost accounting and related statements, or holds himself out to the public as a cost and management accountant; or renders professional service or assistance in or about matters of principles or details relating to the cost and management accounting procedures, or the recording, presentation or certification of costing facts or data; or render such other services as, in the opinion of the council, may be rendered by a cost and management accountant in practice.
From the contents as mentioned above it is clear that the objectives, functions and purpose of two institutes are completely different. Conducting audit of financial statements is a matter of complying with law and functions of Chartered Accountants. If we analyse the spirit of the CMA's ordinance 1977 it may be observed that the Ordinance does not give them power to conduct financial audit. Had the cost and management accountants been empowered to conduct financial audit the section 18(4) of CMA Ordinance 1977 would not have mentioned that the auditing of the annual accounts of the Institute of Cost and Management Accountants of Bangladesh has to be conducted by a qualified Chartered Accountant of ICAB. So, if insertion of sections 35(3A) and 129A and sections proposed for amendment 75(2)(d)(iv), 83AAA, 83AAA(1), & 83AAA(2), 83AAA(3) and 107F in the Income Tax Ordinance 1984 through Finance Bill 2014-15  is approved and passed, it will be a violation of and contradictory to the Cost and Management Accountant Ordinance 1977. Moreover, insertion of sections 35(3A) and 129A and sections proposed for amendment 75(2)(d)(iv), 83AAA, 83AAA(1), & 83AAA(2), 83AAA(3) and 107F in the Income Tax Ordinance 1984 through Finance Bill 2014-15 will  also be contradictory to other existing law. For example, according to tax law, the status of an organisation performing micro-credit activities as assesses is individual not company. If the Finance Bill is passed with the proposed amendments of the income tax ordinance as detailed above, cost and management accountant will be eligible to perform the audit of financial statements of such organisations. But according to law of Micro Credit Regulatory Authority, only enlisted Chartered Accountant Firms are eligible to perform the audit of a micro-credit operating organisation. So, there will be a big confusion and conflict among the auditors and this law will create a scope of maintaining two sets of audit reports. In addition to this, in proposed section 129A it has been mentioned that certificate will be issued by the Chartered Accountant but in the last paragraph of the same section it is mentioned that penalty shall be imposed upon chartered accountant or cost and management accountant, which is completely inconsistent.
The article of Financial Express which has been mentioned earlier mentioned that there are a large number of audited accounts where the companies are consistently incurring losses and creating negative net worth but some of those companies are never defaulted in repayment of bank loans and considered to be good banking clients. Where the problem of the said audited accounts lies is not clear because before charging interest and depreciation a company may be profitable but after charging interest and depreciation the company may incur loss. Installment of bank loan may be covered by total of interest and depreciation, i.e. despite incurring loss a company may be capable enough to repay the bank loan regularly which make it a good banking client.
However, it cannot be denied that there are some irregularities in conducting the audit activities. In this regard ICAB is very keen and particular. If any complain comes from any corner the ICAB considers the matter very seriously and takes necessary actions against the wrong-doers after necessary investigation. For example, the ICAB suspended recently the membership of three Chartered Accountants from Public practice in listed companies and it has also reprimanded 20 Chartered Accountants. In addition to performing regulatory activity ICAB is also making contribution to national economy through different ways. Every year before the finalisation of the budget lots of suggestions as regards Income Tax and Value Added Tax are given to the National Board of Revenue (NBR) by the ICAB. Recently, vigorous training on accounting has been given to a good number of NBR officials by the ICAB which will be very effective for discharging their duties resulting increase of tax revenue.
Finally, considering the facts, legal contents and contradictory issues with other laws, it is hoped that the National Board of Revenue (NBR), the Members of Parliament and others concerned will take necessary effective steps to resolve the issues in the greater interest of the nation and for avoiding  any complicacy of the accounting and audit profession before finalising and approving the Finance Bill as Finance Act.
The writer, a Chartered Accountant, is Council Member & Ex-Vice President of the Institute of Chartered Accountants of Bangladesh (ICAB).  sha.hossain@gmail.com