Bangladesh

Corporate financial reporting requirements in Bangladesh are outlined in a number of laws, which include the Companies Act 1994, the Finance Act 2023, the Financial Reporting Act 2015 (FRA) enacted in 2015, the Securities and Exchange Ordinance 1969, the Bangladesh Securities and Exchange Commission Act 1993, the Bangladesh Securities and Exchange (BSEC) Rules 1987, the Bank Company Act 1991 (amended up to 2018), the Insurance Act 2010, the Bangladesh Chartered Accountants Order 1973 and the Cost and Management Accountants Act 2018, the Income Tax Ordinance and Rules 1984 and the VAT and Supplementary Duty Act 2012, etc.

The Companies Act of 1994 stipulates that all companies must prepare financial statements in accordance with financial reporting standards applicable in Bangladesh. Under the Financial Reporting Act 2015, public interest entities as defined by the Act are required to apply IFRS as adopted in Bangladesh. The Bangladesh Securities and Exchange Commission (BSEC) Rules of 1987 require listed companies and the Insurance Development and Regulatory Authority (IDRA) require insurance companies, to apply full IFRS, while the Central Bank of Bangladesh, under the authority of the Banking and Financial Institution Act and Regulations of Bangladesh, requires banks and other financial institutions to apply IFRS as adopted in Bangladesh. Further, as per Microcredit Regulatory Authority Act, 2006, microcredit enterprise established as a “public interest entity" is required to apply IFRS as adopted in Bangladesh.

Under the Financial Reporting Act 2015, the Financial Reporting Council (FRC) is responsible for adopting both accounting and auditing standards to be applied in Bangladesh.

The Companies Act of 1994 stipulates mandatory financial statement audits for all companies and specifies that only Chartered Accountants (CA) who are practicing members of ICAB are authorized to perform audits of financial statements.

The Institute of Chartered Accountants of Bangladesh (ICAB) is the primary regulatory body for the chartered accountants and the Institute of Cost and Management Accountants of Bangladesh (ICMAB) is the primary regulatory body for the cost and management accountants. The Bangladesh Parliament passed the Financial Reporting Act 2015 on September 6, 2015. A Financial Reporting Council has been established under this Act for bringing public interest entities’ (PIE) financial reporting activities under a well regulated structure, setting standard for the accounting and auditing profession, properly observing, implementing, supervising and executing other activities thereto as an independednt oversight body.

Its responsibilities include:

• Establishing financial reporting requirements for Public Interest Entities (PIEs), including the responsibility to adopt accounting and auditing standards, and ethical requirements for all professional accountants;
• Monitoring and reviewing financial reporting of public interest entities;
• Monitoring the work and conduct of all auditors including the responsibility to discipline auditors and audit firms that violate any of the provisions of the new Act; and
• Enforcing compliance with accounting and auditing standards, and ethical requirements.

There are two professional accountancy organizations in Bangladesh: The Institute of Chartered Accountants of Bangladesh (ICAB) and the Institute of Cost and Management Accountants of Bangladesh (ICMAB).

Under the Bangladesh Chartered Accountants Order of 1973, the Institute of Chartered Accountants of Bangladesh (ICAB) was established for regulating the profession of accountants and for the matters connected therewith. Its mandate includes: (i) determination of qualifications for membership in the institute; (ii) oversight of the initial professional development (IPD) and continuing professional development (CPD) of its members; (iii) conducting professional examinations; (iv) establishment and maintenance of a quality assurance (QA) review system; (v) licensing auditors; (vi) maintenance and publication of a register of persons qualified to practice as accountants and auditors; (vii) the investigation and disciplining (I&D) of its members for professional misconduct; and (viii) disseminating accounting and auditing standards. It works closely and collaborates with the FRC to adopt and implement international standards in Bangladesh. Members of ICAB are designated as Fellow Chartered Accountants (FCA) or Associate Chartered Accountants (ACA). Membership is mandatory for all Chartered Accountants (financial accountants and auditors) in the jurisdiction.

The Cost and Management Accountants Ordinance of 1977 establishes the Institute of Cost and Management Accountants of Bangladesh (ICMAB) to be responsible for all matters regarding all cost and management accounting professionals. Under the Ordinance, ICMAB is responsible for: (i) stipulating the qualifications for membership; (ii) establishing professional examinations; (iii) maintaining and publishing a register of members who hold practicing certificates; (iv) developing cost accounting related professional standards and rules of conduct; (v) operating an I&D system for its members; and (vi) appointing and removing members of the Institute in accordance with ICMAB’s regulations. Members of ICMAB are designated as Fellow Cost and Management Accountant (FCMA) or Associate Cost and Management Accountant (ACMA). ICMAB is a mandatory membership body for cost and management accountants in Bangladesh.

The Bangladesh Parliament passed the Financial Reporting Act 2015 on September 6, 2015. This Act is called for the establishment of an independent regulatory oversight body the Financial Reporting Council (FRC), to oversee the profession and two professional accountancy organizations in Bangladesh in relation financial reporting of PIEs , and oversee the performance of auditors and audit firms that conduct audits of financial statements of PIEs including financial institutions. See the Regulation section for more information.

The Institute of Chartered Accountants of Bangladesh (ICAB)

Under the Bangladesh Chartered Accountants Order of 1973, ICAB was the sole regulator of accountants and auditors. Its mandate included: (i) determination of qualifications for membership in the institute; (ii) oversight of the initial professional development and continuing professional development of its members; (iii) conducting professional examinations; (iv) establishment and maintenance of a quality assurance review system; (v) licensing auditors; (vi) maintenance and publication of a register of persons qualified to practice as accountants and auditors; (vii) the investigation and disciplining (I&D) of its members for professional misconduct; and (viii) setting accounting and auditing standards. Members of ICAB are designated as Fellow Chartered Accountants or Associate Chartered Accountants. Membership is mandatory for all Chartered Accountants (financial accountants and auditors) in the jurisdiction. In addition to being an IFAC Member, ICAB is a member of the South Asian Federation of Accountants (SAFA) and the Confederation of Asian and Pacific Accountants (CAPA).

The Institute of Cost and Management Accountants of Bangladesh (ICMAB)

The Cost and Management Accountants Ordinance of 1977 establishes the regulatory authority of ICMAB regarding all cost and management accounting professionals. Under the Ordinance, ICMAB is responsible for: (i) stipulating the qualifications for membership; (ii) establishing professional examinations; (iii) maintaining and publishing a register of members who hold practicing certificates; (iv) developing professional standards and rules of conduct; (v) operating an I&D system for its members; and (vi) appointing and removing members of the Institute in accordance with ICMAB’s regulations. Members of ICMAB are designated as Fellow Cost and Management Accountant or Associate Cost and Management Accountant. ICMAB is a mandatory membership body for cost and management accountants in Bangladesh. In addition to being an IFAC Member, ICMAB is a member of SAFA and CAPA.

The Bangladesh Parliament passed the Financial Reporting Act of 2015. The new Act calls for the establishment of an independent regulatory oversight body, the Financial Reporting Council (FRC), to oversee the accountancy profession, the performance of auditors and audit firms that conduct audits of financial statements of listed entities and financial institutions, and the two professional accountancy organizations. As of July 2016, the FRC has not been established.

The main quality assurance function is being undertaken by the Institute of Chartered Accountants of Bangladesh (ICAB). The Financial Reporting Monitoring and Practice Review (FRM & PR) under the guidance of Quality Assurance Board (QAB) of ICAB conducts QA reviews following standards as adopted by the ICAB. ICAB reports that the QA system in Bangladesh is aligned with the requirements of SMO 1 and includes the adoption of ISQM 1. The Audit Practice Assurance Division of Financial Reporting Council also observes the activities of the professional accountancy institutes in PIEs. They can oversee such quality assurance activities with jointly and/or independently.

Current Status: Adopted

The Institute of Chartered Accountants of Bangladesh (ICAB), the Institute of Cost and Management Accountants of Bangladesh (ICMAB) and local universities are responsible for establishing initial professional development (IPD) and continuing professional development (CPD) requirements for professional accountants in Bangladesh.

Both ICAB and ICMAB have incorporated the latest IES in their respective education programs.

Current Status: Adopted

Under the Financial Reporting Act 2015, the Financial Reporting Council (FRC) is authorized to set auditing standards in Bangladesh.

The Act authorizes the FRC to collaborate and discuss adoption and implementation of the standards with the Institute of Chartered Accountants of Bangladesh (ICAB). ICAB has been conducting number of webinar, seminar, training and workshops on any update in ISA and its implementation. The latest ISA are adopted in Bangladesh.

Current Status: Adopted

Under the Financial Reporting Act 2015, the Financial Reporting Council (FRC) is authorized to adopt and develop a Code of Ethics for all professional accountants in Bangladesh. ICAB has been conducting number of webinar, seminar, training and workshops on any update in IESBA Code of Ethics and its implementation. In addition, ICAB has a set of stringent provision as professional misconduct for its members. The latest International Code of Ethics for Professional Accountants is adopted in Bangladesh.

Current Status: Adopted

The Constitution of Bangladesh outlines the public sector accounting framework and authorizes the Office of Comptroller and Auditor General (OCAG) of Bangladesh outlines the accounting framework and is authorized to determine applicable standards for the public sector.

Some Cash-basis IPSAS have been adopted in Bangladesh. The timelines to adopt all IPSAS is still undecided and while there are talks to review and adopt, no established timeline has been set.

Current Status: Not Adopted

A separate enforcement department guided by a separate committee named Investigation and Disciplinary Committee of ICAB hase been dealing with investigation and disciplinary matters over the years in ICAB.

Under the Financial Reporting Act 2015, the Financial Reporting Council (FRC) is authorized to monitor the conduct of all professional accountants. At the time, both the Institute of Chartered Accountants of Bangladesh (ICAB) and the Institute of Cost and Management Accountants of Bangladesh (ICMAB) continue to conduct I&D functions for their respective membership.

ICAB reports that its I&D system is aligned with SMO 6 requirements.

ICMAB reports that its I&D system aligns with the majority of SMO 6 requirements except that there is no independent body for appeals, elements of this administrative process is decided on a case by case basis, and there is no process to liaise with external bodies on cases.

Current Status: Partially Adopted

Under the Financial Reporting Act 2015, the Financial Reporting Council (FRC) is authorized to set accounting standards in Bangladesh. The latest IFRS and IFRS for SMEs are adopted in Bangladesh.

The Act authorizes the FRC to collaborate and discuss adoption and implementation of the standards with the Institute of Chartered Accountants of Bangladesh (ICAB).

The FRA Act 2015, The Finance Act 2023, the Bangladesh Securities and Exchange Commission (BSEC) Rules of 1987 requires all listed companies to apply IFRS. The Insurance Development and Regulatory Authority (IDRA) also requires all insurance companies to apply IFRS. The Central Bank of Bangladesh also requires banks and other financial institutions to apply IFRS.

ICAB has been conducting number of webinar, seminar, training and workshops on any update in IFRS standards and its implementation.

Current Status: Adopted

Relevant Organizations

• Institute of Chartered Accountants of Bangladesh (ICAB)
• Institute of Cost and Management Accountants of Bangladesh (ICMAB)

Relevant Legislation

• Bangladesh Chartered Accountants Order, 1973
• Financial Reporting ACT, 2015
• Bangladesh Securities and Exchange Rules, 1987
• Companies Act, 1994
• Cost and Management Accountants Ordinance, 1977
• Cost and Management Accountants Act 2018

Relevant Publications/ Links

• ICAB, SMO Action Plan, May 2024
• ICMAB,SMO Action Plan, May 2024
• IFRS Foundation, “IFRS Application Around the World—Jurisdictional Profile: Bangladesh,” June 2016.