After much delay Bangladesh parliament passed the Financial Reporting Act 2015 on September 6, 2015. On September 9, 2015 it is officially published as gazette.
This is a big step for ensuring more transparency and accountability in financial reporting activities. After the recent crisis in the stock market, the need for monitoring the auditing and accounting activities grows louder. Back in 2003, the World Bank recommend to establish an independent oversight body in a report. The last caretaker government approved a financial reporting ordinance, however it was not approved by parliament later on. In 2012, a financial reporting law was proposed by the concerned community. After three years, the long awaited the law has been passed.
What will change:
From now on, the Financial Reporting Council (FRC) under the Act, will be the regulatory body for ensuring transparency and accountability in accounting and auditing of financial organisations, including various government, autonomous and non-government institutions. It will also monitor activities of the country’s chartered accountants and cost and management accountants.
Previously the Institute of Chartered Accountants of Bangladesh (ICAB) was the one and only governing body of the country’s chartered accountants.
Key responsibility of the Financial Reporting Council:
- to setup / adopt the Accounting Standards/Financial Reporting Standards and Auditing Standards with Standard Code of Conducts for the professional Accountants;
- to license auditors and maintain a register of licensed auditors and approval of firms;
- to monitor and review the authenticity and fairness of financial reporting by public interest entities;
- to monitor the practice of auditors with a view to maintaining high standards of professional conduct;
- to monitor and enforce compliance with Accounting Standards/Financial Reporting Standards and Auditing Standards, etc.
Registration with Financial Reporting Council:
After the establishment of the FRC, all auditor and audit firm must register with the FRC. Without registration, no auditor and audit firm will be able to provide auditing service to any entity related with public interest.
For registration, the auditor or audit firm needs to apply to the FRC. The FRC will review the application and will provide the registration pursuant to the rules and guidelines.
Cancellation and fine
If any auditor or any audit firm violate any provisions of the act or any of its rules and guidelines, FRC may cancel or suspend the registration and may fine as well.
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