Overview Accounting and Auditing in Bangladesh
During the British colonial era, the accounting profession in Bangladesh first emerged. The essential standards for financial reporting that apply to all businesses in Bangladesh were established by the Companies Act of 1994. The Institute of Cost & Management Accountants of Bangladesh (ICMAB) and The Institute of Chartered Accountants of Bangladesh (ICAB) are the two prestigious organizations that now officially represent the profession. The Bangladesh Financial Reporting Standards (BFRS), which include the required standards for financial reporting, are established by the ICAB. The Bangladesh Accounting Standards (BAS) are also part of BFRS.
What does Accounting and Auditing mean?
Accounting, which includes the processes of recording, classifying, summarizing, and deciphering financial events and accounts, is frequently referred to as the specialized language of business. Its main goal is to evaluate and convey an organization's financial situation. It entails systematically and thoroughly recording all relevant financial information, including revenue, costs, assets, liabilities, and equity. Accounting's primary goal is to deliver accurate and trustworthy financial data to support decision-making, financial management, and the evaluation of an entity's financial health. Different accounting concepts, standards, and procedures are included in order to guarantee uniformity, openness, and regulatory compliance.
On the contrary, auditing is the process of carefully going over all of an organization's financial records, including transactions and statements, in order to spot any discrepancies or mistakes that might have been made during the recording process. The correctness and dependability of the financial records are the main goals of auditing.
An organization's financial records, statements, transactions, and internal controls are systematically and independently examined during an audit. It is carried out by experienced experts known as auditors, who evaluate the consistency, veracity, and correctness of the financial data provided by the organization. Giving stakeholders, including shareholders, investors, and regulators, certainty about the accuracy and integrity of the financial statements is the main objective of auditing. The trustworthiness of the financial information is assessed by auditors, together with the efficacy of internal controls, inconsistencies, and discrepancies. By ensuring openness, responsibility, and conformity to legal requirements, auditing boosts public trust in the financial reporting process.
Importance of Accounting and Auditing in Business
Accounting and auditing play essential roles in the company, offering key resources for financial responsibility, transparency, and decision-making. They are essential elements of a sound financial system, ensuring that businesses follow legal requirements, keep accurate financial records, and give stakeholders accurate information.
An organization's financial records and statements are examined by an auditor in a neutral, unbiased manner. It gives stakeholders, such as investors, creditors, and regulators, reassurance regarding the veracity and integrity of the financial data. Audits assist in identifying mistakes, fraud, or false claims, protecting the interests of shareholders and fostering financial integrity. Auditing boosts investor trust, promotes capital formation, and aids in the stability of the general economy by holding businesses accountable for their financial performance.
Accounting procedures that are accurate and thorough provide firms with a clear picture of their financial status, performance, and cash flows. Accounting records are used to make financial statements, which are crucial tools for management, lenders, investors, and other stakeholders. These declarations aid in assessing a company's profitability, liquidity, and solvency, assisting in strategic decision-making, and promoting efficient resource allocation.
The use of auditing and accounting in organizations fosters ethical behaviour. They create a system of checks and balance that guard against fraud, conflicts of interest, and irregular financial transactions. Companies can evaluate their internal controls, risk management practices, and operational effectiveness by performing internal audits. Enhancing corporate governance practices and identifying opportunities for improvement promotes more responsibility, honesty, and trust.
Auditing in Bangladesh
Office of the Comptroller and Auditor General
In Bangladesh, the Office of the Comptroller and Auditor General (OCAG) has been assigned to monitor the efficiency and accuracy of the government's financial activities and expenditures. Its duty as the Supreme Audit Institution (SAI) is to determine whether the use of public funds by governmental agencies, boards, and statutory organizations has produced satisfactory results. The President of the Republic appoints the Comptroller and Auditor General (CAG), who is vested with the power to choose the scope and depth of the audit.
Audit Directorates under the Office of the Comptroller and Auditor General
- Local and Revenue Audit Directorate
- Commercial Audit Directorate
- Foreign Aided Projects Audit Directorate
- Works Audit Directorate
- Railway Audit Directorate
- Post, Telecommunication, Science and Technology Audit Directorate
- Performance Audit Directorate
- Defence Audit Directorate
- Mission Audit Directorate
- Civil Audit Directorate
Types of Audits in Bangladesh
- Financial Audit: Enhancing the level of confidence of intended users in the financial accounts is the goal of a financial audit or audit of financial statements. The accuracy and reliability of a company's financial statements are assessed through financial statement audits. The financial records, transactions, and supporting paperwork are extensively examined by independent auditors to make sure they comply with all applicable accounting standards and legal requirements. Financial audits are primarily concerned with evaluating the financial condition, financial performance, cash flow, and other elements of the financial statements against the standards established by the responsible party.Financial audits focus on the financial statements themselves as their subject matter. As the auditing authority, the Office of the Controller and Auditor General (OCAG) is tasked with gathering sufficient and pertinent data to create a reasonable foundation for establishing an opinion and drawing a judgment regarding the relevant facts. The ultimate objective is to provide the intended users of the financial statements sufficient certainty.
- Complaisance Audit:Audits of compliance are performed to ensure that a company is abiding by all applicable rules, laws, and contractual commitments. These audits make sure the company complies with all applicable laws, industry standards, and internal regulations. Any deviations from the set standards can be found by performing compliance audits, allowing for the implementation of remedial actions. A compliance audit's main objective is to determine if a certain topic conforms to the standards established by pertinent authorities. The scope and aim of the audit determine the compliance audit's subject matter. The focus of compliance audits conducted by the Office of the Controller and Auditor General (OCAG) is generally on companies or audit units.
- Performance Audit:Performance audits are carried out to assess the efficacy and efficiency of a company's operations, initiatives, or programmes. These audits determine whether resources are being used effectively, whether objectives are being reached, and whether expected results are occurring. It is possible to improve organizational performance by performing performance audits. A performance audit's main objective is to assess if actions, programmes, and institutions are operating in accordance with the concepts of economy, efficiency, and effectiveness and to identify any room for improvement. The exact goals specified for the audit establish the topic area of the audit.
Duties of Auditors
Auditors must carry out their duties with the highest neutrality, independence, and objectivity while exercising proper professional care. In both practice and public perception, it is essential for auditors to retain objectivity in their judgments, conclusions, and recommendations. They must behave independently of the audited organization and maintain an impartial viewpoint. Auditors should take reasonable precautions and use the proper techniques while conducting audits, keeping in mind that judging what is acceptable can be a subjective process. Auditors should also take the necessary steps to compile the pertinent data needed for a complete audit. In order to be informed and competent in their industry, auditors should also keep up with changes in professional concerns, audit procedures, standards, guidelines, practice notes, and bulletins. Auditors can efficiently carry out their duties and keep stakeholders' trust and confidence by abiding by these standards.
Executing the planned processes in order to collect sufficient and pertinent evidence and then assessing that evidence to reach conclusions constitutes conducting an audit. The engagement team, under the direction of the team leader, is in charge of recording every action taken. Additionally, the outcomes of these operations and the evidence gathered must be documented. The justification for the extension and the precise nature of the extra processes must also be documented if, during the audit engagement, it becomes necessary to extend the intended audit procedures for any reason.
Accounting Standards Used in Bangladesh
The Bangladesh Financial Reporting Standards (BFRS), which comprise the Bangladesh Accounting Standards (BAS), were created by the ICAB. The International Accounting Standards (IAS) and International Financial Reporting Standards, published by the International Accounting Standards Board (IASB), are closely connected with these standards.
Earlier IAS, notably those created by the International Accounting Standards Committee (ASC), were the foundation upon which the ICAB initially established the BFRS. However, the ICAB embraced the amended standards and included them in the BFRS when the IASB released a better IAS and new IFRS. Based on IFRS 2012, all BFRS has been updated and changed.
The Technical and Research body, a standing body of the ICAB, evaluates the latest national and international pronouncements and standards pertaining to accounting, auditing, and related subjects on a regular basis to guarantee their relevance and appropriateness in the Bangladeshi environment. Following a technical examination to determine their applicability, the committee proposes acceptance of these standards to the ICAB Council.
Services offered by Enterslice
- Financial Statement Analysis and Preparation
- Creation of financial statements that adhere to rules and accounting guidelines
- Financial statement analysis to evaluate business performance
- Record-keeping and bookkeeping
- Maintaining financial records accurately and up to date
- Recording and classifying transactions for efficient financial management
- Organizing financial records for quick recovery
- Tax Planning and Compliance
- Management report preparation for informed decision-making
- Assessment of company performance in relation to financial objectives
- Auditing Services
- Audits of Financial Statements
- Adherence to accounting standards and legal obligations.
- Audits of Compliance