Strong collaboration between Regulators needed to bridge the gap of Financial Statements of Banks in Bangladesh
Experts at a members’ conference have suggested for strong collaboration between the regulators in banking sector to adjust the requirements between International Financial Reporting Standards (IFRS) and Local Laws and Regulations to repair the gaps while preparing the Financial Statements of Banks in Bangladesh.
They also identified number of differences and deviations from IFRS in notes to Financial Statements of Banks in the areas of Financial Statements components and presentation, cash and cash equivalents, cash flow statement, investment in debt securities - Initial recognition and reclassification, provisioning the loans and advances, recovery against impaired loan, etc.
In case of conflict arises, general understanding is that the local laws from primary regulators would prevail. As a result, there are differences, they observed.
To be fully compliant with IFRS, a cross regulators ‘Task Force’ may be formed who would review and identify the gaps between IFRS, local laws and regulations. The Task Force would also review the new standards, understand implications while engage various regulatory bodies with a view to develop an implementation plan of the standards. Credible and compliant financial statements is critical for Bangladesh at a stage when country is graduating to becoming developing nation. In this connection ICAB together with FRC along with other regulators, could develop a road map to align accounting practice in Bangladesh with IFRS, they suggested.
As the Chief Guest Kazi Sayedur Rahman, Deputy Governor, Bangladesh Bank said, confidence of local and foreign investors and the depositors of banks and NBFIs are largely depended on the accounting system of a country. If there is any deviation from the International standards specially IFRS, these should be addressed first. Transparency, accountability and true fair information of financial statements definitely increase the level of confidence where Chartered Accountant are instrumental by maintaining compliance to the standards applicable in accounting, he further said.
Bangladesh Bank will sit together with ICAB and FRC to narrow down the gaps between the local laws and the international standards particularly IFRS so that a congenial atmosphere would be created to attract foreign direct investment. As per the Bank Company Act, auditors are performing external audit of Banks. The central Bank expects that the external auditors would provide information about gross violation or deviation of any Banks in their transactions. External Auditors should dragonize the problems of banks and forecast the probable financial disaster so that Bangladesh Bank could take necessary action to save the bank from the disaster, he added.
Mohammad Shams-Ul Islam, Managing Director & CEO, Agrani Bank Ltd said, to make the accounting language more effective, IFRS plays a pivotal role. Chartered Accountants have the responsibility to ensure the compliance of IFRS in the accounting systems so that it would be accepted by all. Braving the pandemic threats Bangladesh is advancing as one of the fastest growing countries with 305 billion dollars GDP and 43 billion dollars foreign exchange reserve. Bangladesh Bank has played the stellar role in this regard, he said and added that moving towards the developed country, compliance culture and regulatory environment must to be conducive to the international standards.
ICAB President Muhamudul Hasan Khusru FCA said that Bangladesh Securities and Exchange Commission, Bangladesh Bank, FRC and other regulatory bodies made it compulsory for listed entities, banking companies and other financial institutions to comply IFRS. In some cases, situations arise where IFRS requirements contradict applicable provisions in national laws and regulations, he said and added that ICAB has taken the initiatives to identify the deviations to IFRS with local regulations in the banking sector of Bangladesh, which will help enhancing the quality of financial reporting.
Financial Reporting Council (FRC) has adopted IFRS in Bangladesh since 1 July 2020. It had the official authority since September 2015 as per Financial Reporting Act (FRA) 2015 and ICAB was performing the responsibility on behalf of FRC during the transition period. Also through various circulars issued by Bangladesh Bank and Bangladesh Securities and Exchange Commission (BSEC) and through Bank Companies Act, the guidelines have been set accounting practice of the country. ICAB and its members are the key stakeholders to understand and implement the IFRS requirements in practice.
A Virtual Members’ Conference on "Implementation status of IFRS in Banking Sector in Bangladesh" was organized by the Institute of Chartered Accountants of Bangladesh (ICAB) on 16 January 2021, Saturday where Syed Mahbubur Rahman, Managing Director & CEO, Mutual Trust Bank Limited also spoke.
Mohammad Al Maruf Khan FCA, Partner, Howladar Yunus & Co., Chartered Accountants, presided over the Members’ Conference as the Session Chairman.
Md. Abdul Kader Joaddar FCA, Vice President -ICAB and Managing Director & Chief Financial Officer of Standard Chartered Bank, Bangladesh presented the keynote paper in the Conference.
M Anwarul Karim FCA, CPA (USA), CFE, Executive Director- Standard Setting Division and Mohammad Mohiuddin Ahmed FCA, Executive Director -Financial Report Monitoring Division of Financial Reporting Council of Bangladesh; and Ashraf-Uz-Zaman Ali FCA, Director, Audit & Advisory Services, Rahman Rahman Huq, Chartered Accountants were the distinguished Panelists.