ATA Khan and Co, Chartered Accountants has been excluded from securities regulator's panel of auditors because of misconduct while auditing Generation Next Fashions Ltd a few years back.
Besides, the Bangladesh Securities and Exchange Commission (BSEC) will request the Institute of Chartered Accountants of Bangladesh (ICAB) to take necessary actions against the firm.
After the 703rd commission meeting on Thursday, the BSEC said in a press release that the firm had been auditing accounts of Generation Next Fashions Ltd for more than three years, breaching orders of the commission.
The audit firm also had been in a nexus with the listed company to overlook non-compliance in accounts preparation.
Earlier, the BSEC had appointed A Qasem and Co, Chartered Accountants as a special auditor to recheck the accounting and auditing activities by the two entities in annual financial statements for the year 2014 and 2015, along with the report for utilisation of right share issue proceeds.
The special audit report revealed the listed textile company did not prepare its financial statements complying standards. The company also did not utilise money properly, which they had raised through issuing right shares, and it was a violation of what they declared.
The company also did not properly appoint Head of Internal Audit and Independent Directors, which was a violation of the then Corporate Governance Guidelines.
On the other hand, Ata Khan and Co helped the company continue the crimes, and as a part of the nexus between the two, the auditor was engaged with the same company for more than three years in a row.
The audit firm was supposed to put qualified opinions about all the violations by the company, but it did not do it.
Based on all the findings of the special auditor, the BSEC has decided to impose a fine of Tk5 lakh on each board member, except for the independent directors, of the Generation Next Fashions Ltd.
Ata Khan and Co, under the punishment, will no longer be able to audit accounts of any listed entity. The BSEC will not accept anything audited by it, even in cases of companies or mutual funds or bonds interested to be listed with the capital market.
The securities regulator minimised the number of allowed chartered accountant firms within 39 to audit the entities under its regulation. With the exclusion of Ata Khan and Co, the number now stands at 38.
On the other hand, the BSEC, on October 28 this year, specified 172 partners of the allowed 39 firms, outside whom no accounting professional can audit public market entities or entities interested to go public.
If the four partners of Ata Khan and Co, namely Maqbul Ahmed, Ashraful Ameen, SM Abdul Hamid and Kazi Munmun Ahmed, are excluded from the list of allowed chartered accountants, the number will come down to 168.
The ICAB, as the primary regulator of all local audit firms, has been requested to take proper action against their member for misconducts.
The ICAB, based on its disciplinary committee's recommendation, in recent years has taken several actions against non-compliant audit firms for the sake of improvement in the country's accounting and audit environment.