Strengthening of Statutory Framework for Financial Reporting is Crucial for Public Financial Management, says a New World Bank Report

DHAKA, Oct. 26 (NsNewsWire) — Bangladesh needs to develop a structured financial reporting framework for the state-owned enterprises and other public sector entities to accelerate economic growth and quality of service delivery, says a new World Bank report launched recently.

The Report on the Observance of Standards and Codes (ROSC) 2014 also recommends that the Company Act need to clarify the financial reporting and auditing framework, supported by a strong and effective enforcement mechanism.

The report identified several challenges, including the absence of a financial reporting framework in the state-owned commercial banks. To overcome the challenge, the country needs a well-defined strategy and regulatory framework for the accountancy and audit profession. The key regulators should strengthen their capacity for reviewing the financial statements of the companies they regulate to ensure compliance with laws and financial reporting standards. For this to happen, the country needs more qualified accountants to meet the evolving demands of both the public and private sectors.

“Bangladesh needs to increase investor’s confidence and boost private investment to achieve its vision of moving up comfortably to middle- income country status from the current low middle-income status,” said Christine Kimes, Acting Country Head, World Bank Bangladesh. “Accelerating reforms to improve the quality of financial reporting and auditing will strengthen capital markets and enhance accountability and transparency of public and private sector entities.”

The ROSC- Accounting and Audit report is part of a 12-module joint World Bank-IMF initiative to assist member countries to strengthen their financial systems by improving their capacity to comply with internationally recognized standards and codes in respect of accounting and auditing. This is the second ROSC for Bangladesh, a follow up to the previous 2003 report.

The current report assessed the degree to which the recommendations of the 2003 ROSC review have been implemented, identified issues that have emerged since the last review and proposed a number of policy recommendations aimed at further improving the quality of corporate financial reporting and auditing. Bangladesh has implemented most of the recommendations for strengthening the accountancy profession since the last review. The country improved the framework for financial reporting for listed companies. The Institution of Chartered Accountants Bangladesh has adopted the International Financial Reporting Standards (IFRS) for small and medium-size enterprises, and the International Standards on Auditing (ISA) and are at different stages of implementation.

However, a number of recommendations of the previous report have not been fully implemented.  In particular, a comprehensive statutory financial reporting framework is yet to be implemented that requires the use of international standards and differentiates requirements for different sizes and types of entities.

The report was launched in a dissemination workshop, which was attended by a wide range of stakeholders representing professional bodies, registrars of Joint Stock Companies, regulators, audit practitioners, business associations, corporate bodies, and research institutes.