FRC warns against doctoring financials

Financial watchdog has again warned against cooking up company financials.

The Financial Reporting Council (FRC) said it will take tougher action as per the act if the practice is not stopped immediately.

The warning came at a virtual conference organised by the Institute of Chartered Accountants Bangladesh (ICAB) on Sunday.

Mahbub Ahmed Siddique, director technical-ICAB presented the keynote paper.

C.Q.K. Mustaq Ahmed, immediate past chairman of the FRC was chief guest.

FRC executive directors Sayeed Ahmed, Mr. Mohammad Mohiuddin Ahmed and M Anwarul Karim joined it as panelists.

Speaking at the programme, Sayeed Ahmed said they have found huge forgeries in the financial statements, but they are yet to impose fines as the Council is at the formative stage.

He said when they had phoned to enquire about such evil practices many auditors did not receive the phone calls.

“We call them by both mobile and land phones but they avoid our phones.”

He said they do not comply with International Accounting Standards (IAS) 19 as they do not give any picture relating to provident fund, gratuity and welfare fund of the companies.

Mr Ahmed said auditors and companies create a nexus to manipulate data while launching IPOs (Initial public offerings).

He noted the FRC will enroll both auditing firms and partners.

“Partners sign the financial statements and firms cannot be made liable. We’ll delist any if found one’s involvement with the financial report forgeries.”

“We’re not as harsh as the Bangladesh Bank or other regulators. We have yet to impose fines because we are at the formative stage, but it cannot continue forever,” Mr. Ahmed said.

He said, ” The names of around half of audit firms will not be on the list if the actions are taken against the forgeries.”

In his speech, Mohiuddin Ahmed said the Financial Reporting Act 2015 has stringent punishment of Tk 500,000 or imprisonment for serious offence.

He said serious offence is defined as non-compliance with the rules and regulations of the FRC.

Mr Karim said that the FRC has been working on the standards.

He said the regulator has already signed some agreements with international standard-setting bodies.

He said auditors should know the Financial Reporting Act minutely for better professional service.

If the FRC finds someone guilty, before taking any decision, the matter is discussed in the council for making proper judgment.

If someone is penalised, there is an opportunity for the aggrieved to take remedy in the external appellate court as per the provision of section 54 of FRA, he said.

He said an auditor has enormous power and has a big role at the same time. Through wrong auditing a company could be destroyed, while for any mistake on its part an audit firm might face liquidation, he said.

ICAB president Muhammad Farooq said in the global business context, the local companies have to survive through tough competition with their foreign counterparts.

He said professional accountants look into the matters related to the financial strengths of a company.

Muhammed Farhad Hussain wrapped up the session while Mohammed Forkan Uddin, vice president of ICAB made the concluding remarks.