Bangladesh Securities and Exchange Commission (BSEC) signed a memorandum of understanding (MoU) with Institute of Chartered Accountants of Bangladesh (Icab) on Wednesday to access Icab's document verification system (DVS) to check companies' financial reports.
Icab introduced the DVS on 1 December last year to curb malpractice of preparing fake financial statements and to establish transparency and accountability in the accounting system of the country.
BSEC officials told The Business Standard, the commission would verify the authenticity of any financial statement provided to it through the new DVS of Icab and that would minimise fraudulent preparation and submission of financial statements.
BSEC commissioner Dr Mizanur Rahman and Icab President Mahmudul Hasan Khusru signed the MoU at the BSEC office in Dhaka.
Icab Vice President Maria Howlader and immediate past President Muhammad Farooq were also present at the event. BSEC Chairman Professor Shibli Rubayat-Ul-Islam along with many Icab leaders was also present during the MoU signing ceremony.
Icab said in a statement, the DVS has already become quite acceptable to the business community and other regulatory bodies. Icab has such arrangements with the National Board of Revenue (NBR) and the Financial Reporting Council (FRC).
As the users of financial statements can verify through the DVS whether the submitted ones are audited by a chartered accountant firm or not, the mutual cooperation would make the accounting system more acceptable and reliable.
Icab also said, around 46,000 annual financial statements are submitted to the Registrar of Joint Stock Companies (RJSC) a year, while Icab members sign around 16,000 of them.
There is a huge gap between Icab's and RJSC's figures and that indicates nearly two-thirds of the annual financial statements are not audited at all.
However, the companies would not be able to commit audit fraud now as the DVS is functioning. The DVS will stop the culture of debt defaulters also, as it helps better due diligences.