Why regulation of financial reporting is important for Bangladesh?
Good regulation is essential to the fairness, efficiency, and effectiveness of economies, and
making it work as well as it can is a never-ending mission. Growth remains a concern globally,
and these results should be a wakeup call for us to examine the impact of regulation, including
the regulation and reform introduced in response to the global financial crisis.
Regulations have impact on both Accounting and Auditing sectors, if regulations is properly
maintained that will be beneficiary for the investors and the economy of the country. Reasons
for regulations in financial reporting are :
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To ensure that the needs of the users of financial statements are met with at least a basic
minimum of information.
To ensure that all the information provided in the relevant economic arena is both
comparable and consistent. Given the growth in multinational companies and global
investment this arena is an increasing international one.
To increase users' confidence in the financial reporting process.
To regulate the behavior of companies and directors towards their investors.
Financial reporting standards on their own would not be sufficient to achieve these aims. In
addition there must be some legal and market-based regulation.
Investors depends on the information of the financial report on the basis of that information
they invested in different company. If proper regulations is not maintained in financial
reporting the company won’t follow the rules in proper ways, there might be chance that they
provide false information to the investors and mislead the investors. And without proper
regulations in financial reporting economy might face great depression.
Who are the regulatory body of financial reporting?
There are several bodies who works for the regulations for financial reporting but most
important bodies in our country are:
Bangladesh bank : As a regulatory body some of the major role of Bangladesh Bank are:
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Formulation and implementation of monetary and credit policies.
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Regulation and supervision of banks and non-bank financial institutions, promotion and
development of domestic financial markets.
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Management of the country's international reserves.
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Issuance of currency notes.
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Regulation and supervision of the payment system.
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Acting as banker to the government .
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Money laundering prevention.
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Collection and furnishing of credit information.
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Implementation of the Foreign Exchange Regulation Act.
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Managing a deposit insurance scheme.
Securities and Exchange Commission (SEC)
Securities and Exchange Commission (SEC) is an independent federal government regulatory
agency responsible for protecting investors, maintaining fair and orderly functioning of the
securities markets, and facilitating capital formation. Some of the most important role of SEC
according to different division are:
Division of Corporate Finance: Ensures investors are given with material information (that is,
information relevant to a company's financial prospects or stock price) so as to from informed
investment decisions.
Division of Enforcement: responsible of enforcing SEC regulations by investigating cases and
prosecuting civil suits and administrative proceedings.
Division of Investment Management: Regulates investment companies, variable insurance
products, and federally registered investment advisors.
Division of Economic and Risk Analysis: Integrates economics and data analytics into the core
mission of the SEC.
Division of Trading and Markets: Establishes and maintains standards for fair, orderly, and
efficient markets.
Institute of Cost and Management Accountants of Bangladesh (ICMAB)/
The Institute of Cost and Management Accountants of Bangladesh (ICMAB) is the national
body of the professional Cost and Management Accountants of Bangladesh. Established with
the prime objective of promoting and regulating the Cost and Management Accounting
profession in the country. Some of the important role of ICMAB are:
• Regulate and develop the value and management accounting (CMA) profession in
Bangladesh.
• Provide and discuss the very best professional degree in cost and management
Accounting.
• Develop knowledge, skills and competence of the CMAs needed to support economic
development of the country.
• Formulate adopt and implement accountancy and auditing standard (CAAS) in
Bangladesh and international arena.
• Conduct research within the field of cost and management accounting so as to
market and develop the profession to satisfy the need of your time.
Institute of Chartered Accountants of Bangladesh (ICAB)
The Institute of Chartered Accountants of Bangladesh (ICAB) is the National Professional
Accounting Body in Bangladesh, established under the Bangladesh Chartered Accountants
Order, 1973 (President's Order No. 2 of 1973). For the purpose of regulating the profession of
accountants and for matters connected therewith. Some of the most important role of ICAB
are:
 Regulate the accounting profession and matters concerned with government or non
 government within the country.
 Administers its members and students
 Ensure sound professional ethics and code of conduct by its members.
 Provide specialized training and professional expertise in Accounting, Auditing,
Taxation, Corporate Laws, Management Consultancy, Information Technology etc.
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Keeps alongside with of latest developments in Accounting techniques, Audit
methodology, Information technology, Management consultancy and related fields.
How regulatory bodies of financial reporting are formed in our country?
Corporate financial reporting requirements in Bangladesh are outlined in a number of laws,
which include the Companies Act of 1994, the Finance Act of 2014, Bangladesh Securities and
Exchange (BSEC) Rules of 1987, the Banking Act of 1991, the Insurance Act of 2010, the
Bangladesh Chartered Accountants Order of 1973, and the Cost and Management Accountants
Ordinance of 1977.
The Companies Act of 1994 stipulates that all companies must prepare financial statements;
however, accounting standards to be applied are not specified. De facto, the Bangladesh
Financial Reporting Standards (BFRS) issued by the Institute of Chartered Accountants of
Bangladesh (ICAB) are applied. BFRS are developed based on the International Financial
Reporting Standards (IFRS) with some modifications. ICAB has also adopted the 2009 version
of IFRS for SME as BFRS for SMEs, with minor modifications. SMEs are permitted to apply
BFRS or BFRS for SMEs.
Different regulators in the country also establish financial reporting requirements for the
entities that they supervise either requiring partial or full compliance with BFRS. The BSEC
Rules of 1987 and the Insurance Development and Regulatory Authority require listed
companies and insurance companies, respectively, to apply full BFRS, while the Central Bank
of Bangladesh, under the authority of the Banking Act of 1991, requires banks and other
financial institutions to apply specific BFRS.
The Companies Act of 1994 stipulates mandatory financial statement audits for all companies
and specifies that only Chartered Accountants (CAs), members of ICAB, are authorized to
perform audits. There is no specific law that defines the auditing standards to be applied. De
facto, CAs conduct audits in accordance with auditing standards adopted by ICAB. The
institute has adopted the 2013 version of the International Standards on Auditing as Bangladesh
Standards on Auditing for application in the country with limited modifications due to local
laws. In addition to financial statement audits, certain public limited companies and stateowned enterprises are subject to mandatory cost audits under the Companies Act of 1994.