Corporate Accountants
As the financial world evolves and transactions become more complex, your accounting policies need to keep pace with change.
Financial statements are not just a statutory obligation; they are a window to investors, lenders and suppliers, present and future and high quality reporting can add significantly to the credibility of your market offering.
Bangladesh has adopted IFRS Standards. Domestic companies whose securities trade in a public market and other large public accountability companies are required to use IFRS Standards. Banks, insurance companies and Non-Banking Financial Institutions (NBFI) prepare financial statements in accordance with their respective Acts and guidelines and at present have some deviations from IFRS Standards.
Financial Reporting framework in Bangladesh
Legal framework
The Companies Act of 1994 provides basic requirements for financial reporting by all companies in Bangladesh. It is silent about either Bangladesh Financial Reporting Standards (BFRS/BAS) or International Financial Reporting Standards (IASs/IFRSs).
Listed companies
The Securities and Exchange Commission of Bangladesh regulates financial reporting by listed companies. SER 1987 requires compliance with IASs/IFRSs as adopted in Bangladesh (these are known as Bangladesh Financial Reporting Standards and include Bangladesh Accounting Standards).
Banks
The Bank Company Act of 1991 mandates reporting formats and disclosures based on BAS 30, which is similar to IAS 30. The Act is silent about other BAS/BFRS, and compliance with BAS/BFRS by banks is mixed.
Insurance companies
The Insurance Act 1938 does not mandate compliance with BAS/BFRS. In practice, insurance companies often do not follow BAS/BFRS.
Other companies
Neither the law nor the by-laws of the Institute of Chartered Accountants of Bangladesh mandates compliance with BAS/BFRS by unlisted companies. Actual compliance varies widely and the ICAB has published the Bangladesh Financial Reporting Standard for Small and Medium-sized Entities (BFRS for SMEs) (see below).
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Bangladesh Financial Reporting Standards (BFRS)
The Financial Reporting Standards prescribed by the Institute of Chartered Accountants in Bangladesh (ICAB) are known as Bangladesh Financial Reporting Standards (BFRS, including Bangladesh Accounting Standards, BAS). BFRS and are closely modelled on International Accounting Standards and International Financial Reporting Standards issued by the International Accounting Standards Board.
BFRS developed by the ICAB were originally based on older International Accounting Standards (IASs) – generally those developed by the IASC rather than the improved IASs and new IFRSs developed by the IASB. In more recent times, the ICAB has adopted the updated IASB standards as BFRS and all BFRSs have been updated based on IFRSs 2012.
The Technical and Research Committee, a standing committee of the ICAB, is responsible for reviewing on a regular basis, the latest national and international pronouncements and standards on accounting, auditing and allied matters, and recommend the same for adoption to the Council, after carrying out a technical review for adoptability and acceptability in the Bangladeshi context.
The Council is responsible for approving and adopting the Standards, Interpretations and related documents.
As at January 2013, a version of all IFRS (and IAS) issued by the IASB had been adopted as BFRS by the ICAB, with the following exceptions:
- IAS 29 Financial Reporting in Hyperinflationary Economies - Adopted but will not enter into force until 2015
- IFRS 9 Financial Instruments - Adopted BAS/BFRS are legally enforceable for listed companies under the SEC Rules. They are not mandatory or enforceable through the ICAB by-laws.
The auditor’s report and basis of presentation note refer to conformity with international accounting standards applicable in Bangladesh.
Small and medium-sized entities
In June 2011, the ICAB published the Bangladesh Financial Reporting Standard for Small and Medium-sized Entities (BFRS for SMEs), which is based on the IFRS for SMEs. Section 31 on hyperinflation is not reproduced in the BFRS for SMEs as, consistent with the non-adoption of IAS 29 the ICAB considers that presently it is not practicable in the Bangladeshi context.
For eligible entities, the BFRS for SMEs is applicable to annual periods beginning on or after 1 January 2013, which earlier adoption permitted.
Opportunity or risk?
Investors have recently told the Financial Reporting Council that they believe a company with high quality financial statements is a more attractive investment. However we understand that the opportunity to meet the information demands of investors must be weighed up against the risk of providing competitors with too much sensitive information.
We appreciate it can be a tough to keep up with the detail of the standards and there is a risk.
In addition, areas of management judgement can be challenging to portray to the reader and it can be hard to translate your ideas into language that appropriately explains performance to stakeholders.
We can help explore your options taking into account your long term ambitions as well as ensuring the key areas that investors specifically look for are covered.
We see ourselves as an extension of your finance team. We provide support and advice on the preparation of your audit file, working alongside you when presenting it to your auditors and providing you with robust, technically sound responses to their queries.
Financial reporting support
The key is in our name. We are here to help you prepare your financial reports and to support you through your annual audit process.
Our team offers a unique blend of extremely technically minded accountants, who are also commercially aware, sympathetic communicators, and have an empathetic view of your business. We have a thorough understanding of your year-end audit processes.
ABM is actively involved in responding to any developments in financial reporting, including changes to International standards.
Our financial reporting advisory service will assist you in making the best decision for your business.
How can ABM help you?
We start by working with you to gain a deep understanding of the transactions that make up your financial statements, particularly any with complex accounting treatments such as complex financial instruments, including embedded derivatives; share-based payments including share options, joint ventures, acquisitions and disposals.
Our service can be tailored to meet your individual needs but typically we will draft your statutory financial statements, including performing a thorough review of the transactions and balances to ensure that The Companies Act of 1994 provides basic requirements for financial reporting by all companies in Bangladesh. It is silent about either Bangladesh Financial Reporting Standards (BFRS/BAS) or International Financial Reporting Standards (IASs/IFRSs).
We will keep in touch with you during the year to ensure you have the necessary year end information such as impairment reviews, share based payment valuations, and fair value figures for complex financial instruments. These require considerable management judgement and are often left to the last minute.
We will ascertain the most appropriate accounting treatment for unusual or complex transactions and create a pack for your auditor to review at or before the year end.
By preparing information for your auditor around key judgements and disclosures as well as any unusual transactions undertaken, your finance team are then freed up to concentrate on reporting current performance to the board and getting your results to your investors quicker.
Corporate Accountants:
Our financial reporting solutions include:
- Assisting companies to understand, operationalise, and assess impact of complex accounting and reporting changes resulting from shifting regulations, new accounting standards, change in business structure;
- Providing support with the end-to-end accounting, process integration, and financial reporting support related to mergers, acquisitions, IPOs and divestitures;
- Performing financial reporting benchmarks with your selected peer group;
- Drafting accounting manuals, accounting policy papers and accounting position papers;
- Offering tailored training and update sessions with practical examples and cases studies.
IFRS Advisory
Every business faces a financial reporting or accounting issue at some point when preparing their financial reports. In these situations, expert advice underpinned by an in-depth understanding of International Financial Reporting Standards (IFRS) and corporate reporting is crucial.
IFRS 9 - Financial Instruments
The final version of IFRS 9, issued in July 2014, is the IASB’s replacement of IAS 39 Financial Instruments: Recognition and Measurement. The standard includes requirements for recognition and measurement of financial assets and liabilities, impairment of financial assets, de-recognition and general hedge accounting.
IFRS 15 - Revenue from Contracts with Customers
At the end of May 2014, IFRS 15 was released. This standard outlines a single comprehensive model of accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance.
IFRS 16 - Leases
Our experienced teams in Audit, Financial Advisory and Real Estate help to ensure that you are compliant, harvest cost-saving opportunities and implement efficient global lease administration governance.
Insurance IFRS
International Financial Reporting Standard 17 Insurance Contracts. Insurance companies have been waiting over a decade for a single global accounting standard that fits their unique and complex industry. ABM understands the insurance industry and its need to gain improved economies of scale and minimize duplication through mandated regulatory change.
IFRS 17 Insurance Contracts establishes principles for the recognition, measurement, presentation and disclosure of insurance contracts within the scope of the Standard. The objective of IFRS 17 is to ensure that an entity provides relevant information that faithfully represents those contracts. This information gives a basis for users of financial statements to assess the effect that insurance contracts have on the entity’s financial position, financial performance and cash flows.
