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ICAB sees no need for Financial Reporting Act

Its president says the govt can instead modify the existing law to better monitor accountancy profession

Sarwar A Chowdhury
THE Institute of Chartered Accountants of Bangladesh (ICAB) finds no necessity of a new law to monitor the accountancy profession, as the institution itself is doing the same job by exercising its legislative power.
But, it proposes, the government can modify the existing law to bring more transparency in the supervision.
Referring to the proposed Financial Reporting Act (FRA), the institute's president said, due to the law there will be dualism in some cases of regulator activities such as licensing, enforcement and punishment.
"There is a provision of taking practising licences under the proposed act. But the ICAB has been issuing such licences to its eligible members under its bylaws," Abdus Salam said in an interview with The Daily Star recently.
The proposed act kept a provision of punishment for lawbreakers, while the ICAB also takes actions against its member firms, if there are allegations, he said, adding that the institute too has a similar department that was recommended by the act to form an enforcement division.
"All these are examples of dualism," he said.
"We think upgrades in the Bangladesh Chartered Accountant Order 1973 can achieve the very purposes of the I RA that is aiming to bring more transparency in the accountancy profession," Salam said.
Referring to the formation of a Financial Reporting Council, which has been recommended in the draft FRA, he said there is no need to form a separate council by enacting a financial reporting law.
"We already have a similar council for monitoring. However, it can be strengthened with participation from the government and people from other sectors," he said.
"The Financial Reporting Council under the FRA will be a super functional body, while the ICAB itself is a regulator that can monitor the chartered accountants and take action against
them, if there are allegations," he said.
As it was recommended in the draft act that the central bank governor will head the Council, Salam said the governor may not be fit for the position. "The Council should be headed by a chartered accountant."
He said the monitoring body may be a 31-member panel, consisting of 20 chartered accountants; secretaries of the finance and banking divisions, commerce and law ministries; chiefs of the central bank, stockmarket regulator, tax collector and insurance regulator; representatives of the apex trade bodies and the premier bourse; and a retired justice.
Sub-committees under the monitoring body such as accounting standards board, auditing standards board, supervisor}' board, investigating board, disciplinary board and appeal board may be headed by nominated representatives from the government, he said. "The government can reach its target of monitoring us by involving them in our existing council," Salam said.
Citing examples of India and Pakistan, he said the neighbouring countries have no separate laws or council; rather, they have government and private sector representations in the chartered accountants' highest body.
"Sri Lanka has a law and the act was promulgated to impose certain obligations on specified business enterprises and their directors, officers and auditors, the default on which would result in various penalties applicable to all parties concerned," Salam said. "Ours can be similar to the Sri Lankan ones."
"Any initiative towards the development of our economy is appreciable. But the proposed act is not in the right order to contribute to our economy positively," he said.
Salam also believes ICAB's development as a self regulatory professional body might be interrupted if this proposed financial reporting act gets approval. "The act may also discourage students to study chartered accountancy. The government should not pass the act at the cost of ICAB," Salam said.