Bangladesh

5 Chapter Accounting

    • Bangladeshs accounting system

       ■ Outline of accounting system

       

      Many of the Bangladesh's accounting systems are prescribed by laws such as the Company Law and the Securities and Exchange Act as itll as Japan. The accounting currency is supposed to be booked by Bangladeshi Taka (BDT), and the booking language is done in Bengali.

       

      When it comes to submitting the stock exchange, there are requirements to fulfill. The accounting period can be less than 12 months or more, but it is said that it should not exceed 15 months. Considering the consolidated settlement with the parent company it is usual to make it 12 months.

       

      The country of Bangladesh's accounting standards are to be applied to all entities. Therefore, regardless of the size of the company and the presence or absence of listing, it will comply with these standards.

       

      Since the Bangladesh's accounting standards incorporate the International Financial Reporting Standards (IFRS), it is internationally consistent.

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      ■ Bangladesh's Accounting Law

       

      In Bangladesh, the general rules on accounting are stated in the Company Law where it applies to all the entities regardless of the listed or unlisted, large enterprises, small businesses or individual businesses.

       

      Only in the industries which the disclosure is required by laws other than the Company Law, except for exceptional circumstances where it prepares the financial statements according to laws other than the Company Law and disclose the certain matters in accordance with the separately prescribed law It is recognized that.

       

      Post period

       

      The accounting period can be arbitrarily decided within a period of 15 months or less as well as it obtain the permission from the Registration Authority, it can extend the posting period up to 18 months (Article 183 (4)).

       

      In principle, taxable years of corporations in Bangladesh will be July to June, but companies can select a taxable year consisting of 12 months (Article 36 of the Income Tax Act 1984). Regards to this, it is possible to set the same accounting period as the parent company in Japan.

       

      Accounting book

       

      The Accounting books shall be kept at offices and should be registered. It must be made available for viewing during business hours (Article 181 (3)). The period of preservation of the book is 12 years and must be stored in good condition along with the relevant evidence (Article 181 (5)). Also, when searching for registration stations etc. enter, it is necessary to provide the contents from the books.

       

      In the case of violating these provisions, the officers of the company will be imprisoned for not more than 1 year and a fine of not more than 10,000 takks (Article 181 (6)).

       

      ■ Currency / Language

       

      Concerning with the accounting books, Bangladesh and Taka Bangladeshi in English are distribute to the book however, the submission to the stock exchanges may be required in English language.

       

      ■ Bangladesh Accounting Standard

       

      The Bangladesh Accounting Standards (BAS) and the Financial Reporting Standards (BFRS: Bangladesh Financial Reporting Standards) comprehensively comply with the International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS).

      The BAS before the year 2003 was only prescribed as the reference number 16 and as reviewed by the World Bank in FY 2003, it received an indication that "It is not in line with internationally acceptable standards".

       

      As a result, the World Bank changed the domestic accounting standards to approach IFRS and IAS directly, adopt IFRS and IAS directly, and furthermore it will set up a regulatory agency (ICAB) where there was a circumstance that urged to it to improve.

       

      Based on this, in Bangladesh, it set up a supervisory agency (ICAB) to evaluate the parts to be advised about IFRS and IAS and the part to converge, and set up, revise and abolish the standards so that it continues to approach IFRS and IAS It was.

       

      Introduction of IFRS

       

      As of August 2015, The Bangladesh's accounting standard adopts the IFRS and IAS that set under the initiative of the Institute of Chartered Accountants of Bangladesh (ICAB) directly under the Ministry of Commerce.

       

      [Applicable company for Bangladesh accounting standard]

       

      Bangladesh accounting standards apply to all companies that are operating in Bangladesh although with the review of the World Bank conducted in 2003, it was encouraged to develop a simplified framework for small and medium sized businesses.

       

      For small and medium-sized enterprises in the future, partial exclusion of accounting standards is being considered.

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      ■ Issues of the Bangladesh Accounting System

       

      ■ Chartered accountant shortage

       

      Bangladesh pointed out in the review of the World Bank that "Although the population of Bangladesh is about 150 million, there are only about 750 accountants, and it is too small for economic growth”.

       

      In response to this, it is decided to partner up with Bangladesh Institute of Chartered Accountants of Bangladesh (ICAB: Institute of Chartered Accountants of Bangladesh) and the association in the UK to train accountants.

       

      In the fiscal of 2011, the number of accountants has also increased over 1,000, and it is expected that the number of accountants will also increase with economic growth in the future.

    • Disclosure system of Bangladesh

      ■ Outline of disclosure system

       

      The disclosure system of Bangladesh is stated by the Dhaka Stock Exchange Rules and the Chittagong Stock Exchange Rules which are based on the Corporate Law and the Securities and Exchange Law.

       

      In addition, contents of securities reports are required to comply with Bangladesh accounting standards.

       

      [Stock Exchange of Bangladesh]

       

      There are two stock exchanges in Bangladesh: the Dhaka Stock Exchange Ltd. (DSE: Dhaka Stock Exchange Ltd.) established in 1954 and the Chittagong Stock Exchange (CSE: Chittagong Stock Exchange Ltd.) established in 1995.

       

      As for the listing number, DSE it is slightly more than 500 company scale, and CSE is made up of 250 company scale market.

       

      The DSE does not introduce by the Internet trading system (in recent years it are asking for introduction), but it is the biggest market in Bangladesh, where it is useful for domestic financing.

       

      Since the Internet trading system has been introduced, the CSE is expanding its network overseas, so it has become a useful market for raising funds from overseas.

      It is said that the request of the company audits are by the accounting auditor therefore, even small and medium enterprises must understand the principles of IFRS and IAS and apply them to practice.

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Disclosure contents and schedule

       

      All the companies operating in Bangladesh are obliged to make an annual report focusing on financial reporting at the end of the fiscal year.

       

      The accounting period of Bangladesh is arbitrary and can be set for a period of 15 months or less (it is possible to extend to 18 months at the Registration Authority). And, the annual general shareholders meeting must be held once a year or more and within 12 months from the previous annual general meeting of shareholders (Article 81 (1) of the Companies Act).

       

      The contents of the disclosure are consistent internationally.

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      (1)   Disclosure schedule

       

      For unlisted companies, it is necessary to submit an annual report to the annual general meeting of shareholders and notify the registrar after that.

       

      The company submits the financial statements, etc. to which the auditor 's audit report is attached to the approval of the general meeting and submits the disclosure documents to the registration authority within 30 days after the end of the ordinary general meeting of shareholders ( Article 190 (1)).

       

      Regarding with financial statements, it must be installed at the office registered with the Registration Authority for a period of 14 days or more prior to the Ordinary General Meeting of Shareholders.

       

      (2)   Disclosure contents

       

       Balance Sheet (Balance Sheet)

       Income Statement

       Statement of changes in equity

       Cash flow statement (Cash flow Statement)

       Accounting policies and explanatory notes

       Management Reports (Board Reports)

       

      Although the above is the contents of disclosure, even if it submit the income statement of a private company other than a subsidiary of a public company to the Registry Bureau, browsing and copying other than those concerned is prohibited (Article 190 1).

       

      The content of the management report is:

       1. Description of business

      2. Amount of retained earnings

      3. Dividend amount

      4. Descriptions of important subsequent events etc. are required (Article 184 (1)).

       

      Listed company

       

      (1)   Disclosure schedule

       

      In the case of listed companies, the disclosure to the general shareholders' meeting and the registration office is the same schedule as for unlisted companies.

      Additionally, the listed companies must complete the audit within 120 days after the end of the fiscal year, and it is necessary to submit the disclosure documents to the stock exchanges within 14 days after the end of the auditing period.

       

      (2)   Disclosure contents

       

       Balance Sheet (Balance Sheet)

       Income Statement

       Statement of changes in equity

       Cash flow statement (Cash flow Statement)

       Accounting policies and explanatory notes

       Management Reports (Board Reports)

       

      ■ Disclosure schedule at inception

       

      According to the company law of Bangladesh, the posting period can be arbitrarily set within a period of 15 months or less and if the Registration Authority accepts, it is possible to extend the accounting period to 18 months (Article 183, Paragraph 4 of the Companies Act).

       

      The company must hold the first general meeting of shareholders within 18 months after the establishment, and if the registration authority finds it, it will be extended an additional 90 days from this holding deadline (Article 81 (1) of the Companies Act).

       

      At the shareholders' meeting at Incorporation, the balance sheet, income statement) must be prepared (Article 183 (2) of the Companies Act).

       

      ■ Penal Provisions on Disclosure Operations

       

      The Bangladesh Company Law has provisions for fine or imprisonment for persons who violate disclosure work.

       

      There are provisions on fines or imprisonment for these various provisions.

       

      I. In cases where the holding period or the holding period of the general meeting of shareholders violates the law.

      ◇ The offending director is fined within 5,000 takas.

      Ⅱ. When the form of the financial statement violates the law

      ◇ The imprisonment for less than 6 months (except when not intentionally done) or 5,000 taka fine or both are applied.

      Ⅲ. Signing of financial statements etc

      ◇ Anyone who violates the signature obligation will be subject to a six months imprisonment or 2,000 taka fine or both.

      Ⅳ. Submission of copies of financial statements etc. to the Registration Authority

      ◇ For violation period, a fine of 200 taka per day will be applied.

       

      ■ Audit system

       

      The Bangladesh Institute of Chartered Accountants of Bangladesh (ICAB: Institute of Chartered Accountants of Bangladesh) serves as the auditing entity. ICAB has trained and examined Charged Accountants in Bangladesh and contributes to improving the skills of the Chartered Accountant in the country. As a result of this, the number of Chartered Accountants has gradually increased.

       

      The standards of the audit are converging with the international auditing standards and therefore, the standards consistent with international auditing standards. Also, all tests will be conducted in English, with the intention of nurturing accountants who can substantially respond to internationalization.

      In Bangladesh, all companies are required to conduct audits by accounting auditors. Therefore, even small and medium enterprises must understand the principles of IFRS and IAS and apply them to practice.