The Institute of Chartered Accountants of Bangladesh (ICAB) has suspended the auditing licence of eight chartered accountants, running six audit firms, for three to five years alongside imposing monetary penalties of Tk3-5 lakh each on the charge of professional misconduct.
According to the latest publication by the body of the country's chartered accountants, the eight include AK Abdul Matin, Netai Chand Talukder, and Md Liaquat Ali Khan – the partners of chartered accountancy (CA) firm A Matin & Company.
The other penalised ICAB members are Anisur Rahman & Company's proprietor Md Anisur Rahman, Mohammad Ata Karim & Company's partner ASM Ataul Karim, Hafiz Ahmed & Company's proprietor Md Hafiz Ahmed, MN Islam & Company's proprietor Nazrul Islam, Mostafa Kamal & Company's proprietor AH Mostafa Kamal.
The ICAB council also decided to reprimand Ataul Karim's ex-partner Imrul Kayas instead of revoking his certificate of practice, considering the context.
A tip of the iceberg
The eight individual professional accountants at six CA firms punished for their proven professional misconducts are a very small part of the auditors being suspected of compromising their professional standards and ethics.
Accounting regulator the Financial Reporting Council (FRC) in the last ten months instructed the ICAB to investigate the auditing due diligence of at least 42 CA firms and 45 of their partners.
Three of the 42 firms are in the panel of the Bangladesh Bank's accepted auditors to sign in the banks' annual reports while five belong to the securities regulator's panel of auditors.
Thanks to the ICAB's Data Verification System (DVS), an online platform launched later last year, that lists all the annual reports okayed by ICAB members and helps users of financial statements to verify if a report was audited by a licensed statutory auditor or not.
Unlike the previous years of dependency on CA firms' annual audit return data from the ICAB, the FRC now directly monitors how many annual reports a CA firm okays in how much time.
Having observed serious contrast in the audit quantity and the engaged firms' capacity in terms of manpower, the FRC suspected the quality of their work, according to sources.
An FRC official told The Business Standard, "It is horrible. With a very small team, some firms have signed more than 200, even 300 annual reports in a short period of four to five weeks, which would need manifold human resources or time if the firms were meant to follow their standard of auditing."
The accounting expert, on condition of anonymity, was speaking about signing annual reports without properly auditing companies.
The worst part of the story is not all their audit clients are struggling small businesses, as popularly perceived. A gigantic local conglomerate's four fast-moving consumer goods (FMCG) firms having several thousand crores of taka in annual turnover also got their last year's accounts audited by such a firm, said sources.
The FRC, in a letter to the ICAB president three weeks ago, was found to be annoyed with the slow progress in investigating the suspected auditors.
ICAB President Shahadat Hossain disagreed with the FRC allegation while talking to TBS.
ICAB committees have to follow their due diligence while investigating, holding hearings, deciding actions against any professional misconduct, and they are working at their best pace, he said.
The country has long been suffering from the government's revenue losses, banks' overlending on inflated accounts and a lack of investors' confidence in fabricated financial statements by a large number of companies.
The ICAB members are running over 150 CA firms in Bangladesh.