The cabinet yesterday approved the draft of the Financial Reporting Act (FRA), 2013 to ensure transparency of audit systems, forming a unique structure for the monitoring of firms listed with stock markets and financial institutions.
The approval was given in the regular cabinet meeting held at the secretariat with Prime Minister Sheikh Hasina in the chair. After the meeting, Cabinet Secretary Mohammad Mosharraf Hossain Bhuiyan told reporters in a briefing that financial reporting was a most important tool to improve financial institutions like public and private offices, bank and insurance companies and corporations of the country.
The audit system of the financial institutions is now run by two major institutions: Institute of Chartered Accountants of Bangladesh (ICAB) and Institute of Cost Management and Accounts of Bangladesh (ICMAB). The new law will have a provision of forming a new independent structure for monitoring the system and set up a standard of auditing.
The government has taken the initiative to enact the new law for ensuring the accountability of auditors and forming a new independent structure for monitoring the system, the cabinet secretary said.
He said a council of 12 members will be formed under the leadership of Bangladesh Bank’s governor as per the law including the Securities and Exchanges Commission Chairman, NBR Chairman, Chairman of Insurances Development and Controlling Authority and representatives of the finance ministry’s Bank and Financial Institutions Division.
Two independent experts from financial sectors, not involved with any financial institutions, will also be in the council, he added.
The council will have three departments: standard setting, monitoring and enforcing.
“A tribunal will be constituted under the leadership of financial professionals,” Bhuiyan said.
The provision of five years in prison and fine of Tk100,000 or the both will be kept in the new law as punishment for violating the law. If any person or institution continues violating the law, they will receive a penalty of Tk5,000 for every day.
Under the act, audit firms’ financial reports will be re-examined and those found guilty of placing fabricated reports will face punishments.
Bhuiyan said the FRA will ensure transparency and accountability in the financial sector and prevent incidents like Hall-Mark and the share market debacle.
Earlier, the draft was placed in the cabinet committee twice for approval but the cabinet asked to do some corrections in the draft without suggesting any specific changes.
The draft has been prepared by the Banking Division as per the recommendations and opinions of stakeholders.
The last caretaker government approved a financial reporting ordinance, but the Awami League-led government did not pass it in parliament after it assumed power in 2009.
Meanwhile the cabinet also approved a proposal of signing an agreement titled SAARC Agreement on Trade in Services (SATIS), to open the facilities of investing in the country’s tourism and telecom sector which may increase the foreign investment in Bangladesh in these sectors.
