The concern about accounting standards
Mujibul Haque | Tuesday, 19 August 2008
Accounting in many areas of business in the country continues to be pursued in the traditional fashion with accounting looked upon as nothing more than book-keeping or taking a stock of routine expenditures and sales returns. But modern accounting is much more dynamic than such traditional practices. It involves regular and meticulous preparation of balance sheets that give a very thorough view of the business organisation including their assets and liabilities. Even the smallest depreciation of standing assets such as capital equipment in the organisation are noted in such a balance sheet as well as the slightest gain in the form of an acquisition by the business firm. Thus, accounting under the up-to-date system reflects the true state of the business in the sense of its good health or otherwise.
Top managers of a business firm that employs good accounting practices should be able to get the latest and comprehensive picture of the health of their company from accounting exercises on a daily basis so that they can detect any undesirable development the moment it occurs and contemplate the taking of action against it. Thus, today's accounting procedures not only aids the organisation by constantly presenting company profiles as they stand and enable the company operators to take corrective decisions, the profiles are also of immense value to investors in company shares and other decision makers in relation to the companies.
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 produced a manual, the Bangladesh Accounting Standards (BAS), long ago. But it is not being followed as a matter of some compulsion in all of the country's business organisations. But business organisations should generally adhere to the BAS. Specially, compliance with the BAS should be made mandatory in the banks and other financial organisations.
The profession of accounting has a long history in this country and there are of course accountants to be found here whose competence and professionalism are as good as any in any part of the world. But there is also the other face to the profession where auditors do their job poorly or do so deliberately out of pecuniary considerations . Company prospectuses that venture to raise resources from the capital market are produced to project exaggerated company profiles through the collaboration of pliant accounting firms; dividends are squeezed due to the preparation of purposefully skewed profit and loss accounts. Besides, many otherwise prospective companies fail to take timely steps for expansion or to make other adjustments as they have not cared to maintain competent accounting departments to aid them in these tasks. Thus, an uplift of accounting standards in the deficient organisations, is so necessary.
Top managers of a business firm that employs good accounting practices should be able to get the latest and comprehensive picture of the health of their company from accounting exercises on a daily basis so that they can detect any undesirable development the moment it occurs and contemplate the taking of action against it. Thus, today's accounting procedures not only aids the organisation by constantly presenting company profiles as they stand and enable the company operators to take corrective decisions, the profiles are also of immense value to investors in company shares and other decision makers in relation to the companies.
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 produced a manual, the Bangladesh Accounting Standards (BAS), long ago. But it is not being followed as a matter of some compulsion in all of the country's business organisations. But business organisations should generally adhere to the BAS. Specially, compliance with the BAS should be made mandatory in the banks and other financial organisations.
The profession of accounting has a long history in this country and there are of course accountants to be found here whose competence and professionalism are as good as any in any part of the world. But there is also the other face to the profession where auditors do their job poorly or do so deliberately out of pecuniary considerations . Company prospectuses that venture to raise resources from the capital market are produced to project exaggerated company profiles through the collaboration of pliant accounting firms; dividends are squeezed due to the preparation of purposefully skewed profit and loss accounts. Besides, many otherwise prospective companies fail to take timely steps for expansion or to make other adjustments as they have not cared to maintain competent accounting departments to aid them in these tasks. Thus, an uplift of accounting standards in the deficient organisations, is so necessary.