Finance Minister AMA Muhith has presented the Finance Bill 2014 along with the budget for the fiscal year (FY) 2014-15 in the Jatiya Sangsad. The budget has been announced amid both applause and critical analysis on the part of the business community, experts, think tanks and political circles. Many newspaper columnists and TV talk show participants have dwelt at length on the proposed budget. However, this write-up will remain confined within the ambit of the Finance Bill only.
Not many changes have been proposed in the budget with regard to personal taxation, company taxation etc. However, private company tax rates have been reduced by 2.5 per cent to 35 per cent. Changes in TDS, rents & slabs of personal taxes have also been proposed. The intention of this article is not to cast aspersions on the speech of the finance minister.
But this writer feels not all the issues brought into the Finance Bill 2014 have been rational, nor are those professionally acceptable and even tenable in the eye of law. Especially when democracy is at work, the majority have to be recognised on priority basis --- which is the beauty of democracy.
The Finance Minister through the Finance Bill has appeared to be 'unjust and unfair' on audits carried out by chartered accountants (CAs). The provisions proposed are also incongruent and, hence, not tenable as per law like the Companies Act, Insurance and Bank Companies Acts inter alia, as far as audit is concerned. The bill has proposed a few amendments. These are discussed in detail below.
The audit and certification of the Financial Statements have been and are the sole authority and responsibility of the CAs. The CAs have been in the task of audit since 1854, when the Royal Charter assigned them to execute the functions. Everyone understands that the Muktars and pleaders perform separate jobs.
Without any reason the Bill has suddenly brought cost and management accountants (CMAs) to the arena of audit. Indeed they are entrusted with the professional responsibility of cost audit. This is also enshrined in the Companies Act 1994, Section 220. The audit by the CAs is enumerated in Section 210 through 219 in the Companies Act 1994. Nowhere in the world are the audit & certification of financial statements done by anybody but the CAs. The differences between the CMAs and the CAs are so vivid and discernable that they need no mention.
The Finance Bill has attempted to find out that those who have failed to show results by cost audit can do better in financial statements audit. In the view of this writer, the quarters behind this proposal are a vested group which wants to create further financial indiscipline by distorting the efficacy of the financial management of the country. They are after tarnishing the image of Finance Minister A M A Muhith.
Let me restate a few issues to back my comments given above. Clause 13 of the Finance Bill says Section 35 (Kha) proposed in clause sub-section (3), "certified by a Chartered Accountant" replaced by "certified by a Chartered Accountant to the effect that the accounts are maintained according to the Bangladesh Accounting Standards (BAS) and reported in accordance with the Bangladesh Financial Reporting Standards (BFRS)." The minister has pressed the CAs tight and well. We like responsibility.
Clause 30 of the bill proposed in Section 75 of the Ordinance No. XXXV I of 1984; additions as: "(iv) in the case of a person, not being a company, having gross sales or receipts of more than Taka five crore from business or profession a statement of accounts either audited by a chartered accountant or a cost and management accountant". How can a CMA conduct audit when the CMA Order 1977 does not allow them to do so?
Again Clause 41 of the Bill proposed amendment to Section 83 AAA as follows: Ordinance No. XXXVI of 1984 in Section 83 AAA: amended with "or cost and management accountant" after chartered accountants. In sub-section (1) after the words "chartered accountants" the words "or cost and management accountants" are added. In sub-section (2) and (3) with the words "chartered accountants" the new words "or cost and management accountants" are added.
Again, Clause 43 proposed to amend Section 107F of the Ordinance No. XXXVI of 1984 by adding the words "or cost and management accountants" after "chartered accountants".
Clause 46 of the Bill has proposed in Section 129A penalty for incorrect or false audit report by chartered accountants or cost and management accountants as follows: "a) is not certified by a chartered accountant to the effect that the accounts are maintained according to the Bangladesh Accounting Standards (BAS) and reported in accordance with the Bangladesh Financial Reporting Standard (BFRS) and (b) is false or incorrect, "he shall impose upon such chartered accountants or cost and management accountants, as the case may be, a penalty of a sum not less than fifty thousand taka but not more than two lac taka". How can an Audit Report be signed by a CMA, for which the CMA order does not have mandate.
In the aftermath of the Bill's placing, the ICAB has searched through the neighbouring SAARC countries to see if any one of them assigns CMAs to the task of Financial Statement audit. We have found that no scope of auditing prevails for CMAs there.
The Bill as such has proposed these points irrationally and unprofessionally making futile attempts to equalise Muktars with pleaders. Such attempts without understanding the qualification and training imparted in 'them' for the cause may and, in all likelihood, invite arrays of trouble and hazards for the financial management, efficacy and discipline in the economy.
The Companies Act, Insurance Act, Bank Companies Act and all other pertinent rules and Acts of different government bodies like BBEC, NGOAB, MRA etc. do not attach mandate to anyone but the CAs to conduct audit. Let us not make attempts to make general practitioners responsible for surgery in the operation theatre. The FS certifications are distinctive tasks to be executed by the CAs, who are 'specialist surgeons', not 'general practitioners'.
The writer is senior partner at Masih Muhith Haque & Co, and a chartered accountant. He is a council member, ICAB
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