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Accountants oppose proposed Financial Reporting Act

Star Business Report
The government should not enact the proposed Financial Reporting Act 2013 as it will curb the independence of the Institute of Chartered Accountants of Bangladesh (ICAB), accounting professionals said yesterday.
"The act, if passed, will create conflicts in regulating the accountancy profession," said Abdus Salam, president of the ICAB.
"It will also disrupt the preparation of financial reporting and auditing," he said at a roundtable on the Act at Sonargaon Hotel in Dhaka.
On August 19, the cabinet approved the draft of the first-ever Financial Reporting Act mainly to set up a Financial Reporting Council to strengthen monitoring of the accountancy profession.
The ICAB, a legislative body, is not an association and currently regulates the profession of the chartered accountants, Salam said. The 1,416-member body is particularly critical of the proposed Council.
The Council will be an 11-member body comprising the presidents of the ICAB and the Institute of Cost and Management Accountants of Bangladesh, and nine government-nominated representatives.
"The plan to set up a super regulator like the Council to do what the ICAB already does at the expense of the taxpayers' money is unnecessary and contradictory," Salam said.
Members of the ICAB also said the proposed law will allow non-chartered accountants to audit the financial reports of a company.
"People who are not chartered accountants may audit a company by virtue of section-2(11) of the Act. It is a conflicting clause with the country's existing law and unacceptable as per international rules," Salam said.
There is a provision in the Act that
requires the existing ICAB members to take registration from the Financial Reporting Council which is unreasonable, he said.
According to the rules of International Federation of Accountants, only an institute of chartered accountants can register the auditors and the ICAB has been issuing and renewing the licences accordingly.
"It will create double standards," said Humayun Kabir, a former president of the ICAB.
Only the ICAB has the statutory authority to prepare and implement the accounting and auditing standards according to the rules of International Financial Reporting Standards, and International Standards of Auditing, he said.
Kabir said the government should strengthen the monitoring of the ICAB if it really wants to improve the quality of the accountancy profession.
"Even if the government wants to implement the act, it should employ professionals at the proposed Council
instead of appointing people who don't have knowledge about the profession."
The Council would actually be a government organisation and it will have no independence, said Muhammad Abdul Mazid, a former chairman of National Board of Revenue.
It will also increase the cost of doing business in the country, and hinder foreign direct investment and joint venture efforts in the long run, Mazid said.
The ICAB should welcome the changes as the body is still deficient in a number of areas such as quality education, training and ethical standards, said Ferdous Ahmed Khan, a special assistant to the prime minister.
AF Nesaruddin, a member of the ICAB, and M Matiul Islam, chairman of Industrial and Infrastructure Development Finance Company (IIDFC) Ltd, also spoke, among others.