Standard financial reporting is very important in attracting foreign investment and restoring business confidence, Comptroller and Auditor General Mohammad Muslim Chowdhury said on Saturday.
Speaking as the chief guest at a webinar, he said in order to implement standard reporting, the activities of the Financial Reporting Council need to be further expanded.
For this, the council will have to increase coordination with other regulatory bodies such as the Bangladesh Bank, the Bangladesh Securities and Exchange Commission and other agencies.
"There is a lack of coordination between the Financial Reporting Council and the professionals in this sector. Coordination needs to be further enhanced," said the comptroller and auditor general of Bangladesh.
The Dhaka Chamber of Commerce and Industry (DCCI) organised the webinar titled "Financial Reporting Act 2015: Impact on Business Activities."
Muslim Chowdhury said that if the internet of things (IoT) and machine learning became more accessible in the next 10 years – due to the Fourth Industrial Revolution – the Institute of Chartered Accountants of Bangladesh (Icab) and the Institute of Cost and Management Accountants of Bangladesh (ICMAB) would need to adopt a long-term plan to modernise the traditional audit reporting system.
He also called for increased transparency and governance in the activities of business entities.
Chowdhury said, "We must value our capabilities in following the International Financial Reporting Standards (IRFS) and our small and medium enterprises (SME) sector is not ready to follow the IRFS guidelines right now, so everyone has to be careful."
DCCI President Shams Mahmood said the role of the Financial Reporting Council in preparing quality audit reports is crucial. It can play an important role in identifying defaulted loans in the country's banking sector.
He said, "Our capital market has not yet made the desired development, and the contribution of the capital market to the country's GDP is the lowest among countries in the world."
"Financial reports can serve as a means in the development of this situation in investing in the capital market by listed and non-listed companies," he added.
The DCCI president said that especially to attract foreign investment, multinational companies must follow international standards under the International Accounting Standards Board and financial reporting is very important.
He added that financial reporting guidelines need to be further simplified and made more user-friendly to ensure that small and medium enterprise entrepreneurs in the country receive funding.
Bangladesh Bank Director Aftab-ul Islam FCA said, "Like Camel Ratings, a ratings system could be introduced for audit companies, by the FRC, which would give us an idea of the efficiency, status and capabilities of such institutions."
He also emphasised the importance of enhancing the credibility of audit reports.
Mohammad Mohiuddin Ahmed, FCA, ACA, executive director of the Financial Reporting Monitoring Division at the Financial Reporting Council, presented the keynote paper at the webinar.
He said that three aspects of business activities such as financial statements, the audit process and transparency assessment are very important for the Financial Reporting Act.
"Quality financial reports play a vital role in making a business entity much more acceptable in the local and international arena as well as boosting the confidence of entrepreneurs and attracting domestic and foreign investment."
He shared that sufficient time needs to be given to the organisation engaged in preparing an audit report.
Dr Javed Siddiqui, an associate professor at the University of Manchester in the UK, said the existing law gives the Financial Reporting Council a lot of power to ensure quality audit reports, which needs to be put into practice.
He mentioned that Bangladesh's audit fee is comparatively less than that of other countries in the world and needs to be increased.
He emphasised the importance of organising more workshops and formulating short, medium and long-term plans to raise public awareness among all concerned.
Supreme Court lawyer AM Masum said further effective initiatives need to be taken to make the council's activities more visible.
He also drew attention to Section 47 of the existing law in order to enhance the powers of auditors as well as the board of directors and management of a company.
Icab President Mohammad Farooq FCA said that the council needs to work to bring regulators under the law.
He said that the financial reports of the companies are usually prepared on the basis of the audit reports of the companies prepared by the auditors and if any inconsistency is observed in this case, it is necessary to bring the auditors as well as the board and management of the organisation under the law.
He noted that the banking sector in Bangladesh does not follow the principles of the International Financial Reporting Standards very closely.
He also proposed to bring the registration of auditors under one body.
ICMAB President Md Jasim Uddin Akon demanded the inclusion of a cost audit under the Financial Reporting Act.