The adoption of the “International Financial Reporting Standard” (IFRS) for SMEs will strengthen access to finance and investment, boost global competitiveness and reduce the risks of financial misreporting, which also provides a structured framework that enhances financial transparency, said Taskeen Ahmed, President of Dhaka Chamber of Commerce & Industry (DCCI).
He was speaking at a focus group discussion on “Implementation of IFRS for SMEs” held at DCCI headquarters on Saturday.
"SMEs are the lifeline of Bangladesh’s economy, contributing over 25% to the GDP," he said.
He also said that IFRS will significantly impact tax revenue collection by improving compliance, minimising tax evasion and bringing more businesses into the tax net.
He also said that limited financial capacity, shortages of skilled labourforce and compliance costs create barriers to adopting IFRS for SMEs.
He, however, stressed the need for investment in training and regulatory alignment.
Dr Mohammad Abu Yusuf, Chairman (Acting), Financial Reporting Council, said that IFRS is very important for SMEs to comply with the international standards, but its implementation is still challenging for our SMEs due to lack of knowledge, skilled workforce, easy procedures and awareness.
He said that there is no alternative to enhancing the capacity of SMEs to make them interested in implementing IFRS. SMEs need to be more focused on IFRS implementation to increase tax compliance, access to capital from the capital market, and signing international trade agreements.
Md Amir Uddin, Executive Director, Bangladesh Bank, said that the implementation of IFRS should be focused on improving the image of local SME entrepreneurs globally, but it is necessary to provide training to improve their skills. They should be well aware of the benefits of implementing IFRS as well.
Nawshad Mustafa, Director, SME & Special Programmes Department of Bangladesh Bank, said that we have a lack of trained and skilled accounting professionals in the country, especially for SMEs. To implement IFRS in a practical manner, an enabling environment is necessary for this.
He also said that IFRS is implemented in 80 countries and it is also required for us to implement, but that should be without affecting the business activities of our SME sector.
Mohammad Jahangir Hossain, General Manager, SME Foundation, said that from SME Foundation, accounting software was provided to a few SME entrepreneurs, but it was not implemented in many cases due to lack of skills and interest.
He proposed sector-based customised accounting software for the SME sector to make it easy. Later he emphasized providing facilitation and training for further implementation of IFRS.
Sk Md Tarikul Islam, Partner, Hoda Vasi Chowdhury & Co. Chartered Accountants, presented the keynote paper.
He also said that capacity building, training for accountants and auditors and initial transition costs are some of the challenges for implementation of IFRS. Regulatory bodies, professional organisations, and financial institutions can play a vital role in facilitating a smooth transition, he added.
He also highlighted key benefits of IFRS for SMEs, such as simplified reporting, cost-effective compliance, enhanced credibility and facilitating growth.
He, however, urged for easy access to finance, lower tax and VAT rates, reduced tax rates for green businesses, tax incentives for SME startups and simplification of the tax-paying process for the SME sector.
DCCI Convener Lutful Hadee said that there are about 2200 chartered accountants in the country; out of them, about 600 are in practice.
"Moreover, about 40,000 part-qualified accounting professionals are also in the market after completing various pertinent courses. But still we need more trained accounting professionals in the country to cope with the growing demand."
DCCI’s Joint-Convenor, Md Shafiqul Alam, FCA, urged for uniformity in the definition of SME in different policies and regulations of different institutions.
DCCI’s Senior Vice-President Razeev H Chowdhury and Vice-President Md Salem Sulaiman were also present during the meeting.
