Docu verification brings to light financial report mismatches: Stakeholders 

The document verification system introduced by the Institute of Chartered Accountants of Bangladesh, also known as ICAB, brings financial report mismatches of many companies into light, stakeholders have observed.

"Many companies are now in trouble as their recent financial statements and previous ones show huge gaps [in earnings and others]. Some of them are now blaming us [for the introduction of the verification system], but we had no alternative to that," ICAB Vice-President Fouzia Haque said on Tuesday.

"When we launched the system, many didn't care about it. Now, the verification system works like an auditor itself," she said at an agreement signing event between the ICAB and the Association of Credit Rating Agencies of Bangladesh on sharing information using the document verification system at the ICAB office in the capital on Wednesday.

"Many companies used to maintain three separate financial statements instead of the original ones. Recently [after the introduction of the document verification system], it is noticed that their income data have been changed, meaning that perhaps we are going to transparency," Momin Ullah Patwary, managing director of National Credit Ratings Limited, said taking part in the programme.

The ICAB launched the document verification system in late 2020 to allow different agencies and regulatory bodies to verify its members-audited financial statements. The agencies need to have agreements with the ICAB first to this end.

In line with the requirement, the Association of Credit Rating Agencies of Bangladesh signed the agreement. The ICAB has similar arrangements with the National Board of Revenue, the Financial Reporting Council, the Bangladesh Securities and Exchange Commission, the Bangladesh Investment Development Authority, the NGOs Affairs Bureau and the Registrar of Joint Stock Companies and Firms.

"From now on, we will have authentic financial reports.‍ Stakeholders, including banks, have to accept those," NKA Mobin, president of the Association of Credit Rating Agencies of Bangladesh, said.

"This drawback [mismatches in financial reports] might continue for the next one to two years, but this correction is a must," he added.

"To mark a company or entity for credit ratings, we have to depend heavily on their financial reports as around 50% of the rating results depend on their financial performance," NKA Mobin explained to The Business Standard after the event.

"The companies whose previous financial reports now show anomalies face hurdles in availing bank loans as their credit ratings have also changed."

ICAB President Md Shahadat Hossain urged the stakeholders to use the ICAB Website to verify the authenticity of audited financial statements.