BANGLADESH FINANCIAL SYSTEM

1. Formal Sector, 2. Semi-Formal Sector 3. Informal Sector

Formal *Sector,== Banks, Non-Banking Financial Institutions (NBFIs), Insurance Companies,

Semi-Formal== Palli Karma Sahayak Foundation (PKSF), Samabay Bank, Grameen Bank

Informal Sector ==Organizations (NGOs)

Fndngs=======
Lack of knowledge of IAS and IFRS

Fear of change to the accounts through implementation of IAS and IFRS

Lack of management willingness to apply IAS and IFRS

Lack of proper knowledge of the users

Local laws, rules and regulations conflict with IFRSs

COMPANY SPECIFIC CHALLENGES: BANKING COMPANIES

Conflicting with Central Bank’s circulars

Recommendation
1. The auditor should certify whether the financial statements are prepared in accordance with
accounting standards (IAS/IFRS)
2. Monitoring of corporate reports by regulatory agencies (e.g. FRC, BSEC, Bangladesh Bank, etc.)
3. Both the Regulators and the Professionals should play an active role in ensuring quality
assurance through adequate monitoring and ensuring effective compliance of the provisions of
law, financial reporting and auditing standards.
4. Government should introduce a legal and regulatory framework prohibiting corrupt practices,
5. Professional accountancy bodies like ICAB should organize seminars and conferences on
IAS/IFRS on a regular basis, for developing user (market) awareness and familiarization with the
practical implementation aspects
6. The regulators, who monitor the quality of disclosure, should improve their review of the
disclosure content of annual reports to ensure higher levels of compliance with mandatory
disclosure requirements.
What is accounting standards?
Accounting standards are rules and guidelines set up by governing bodies, like FASB and IASB, to keep
accounting practices consistent and understandable across all companies and industries.

Accounting standards specify how transactions and other events are to be recognized, measured,
presented and disclosed in financial statements. Their objective is to provide financial information to
investors, lenders, creditors, contributors, and others that is useful in making decisions about providing
resources to the entity

About (IAS) (IFRS)

International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) consist
of a set of globally accepted accounting rules and standards. The adoption of these standards by local
professional body aims at establishing clear local rules of accounting to prepare comparable and
transparent financial statements. The adherence to IAS and IFRS in Bangladesh leads to the
development of an integrated, competitive and attractive capital market, which has encouraged
Bangladesh Securities and Exchange Commission (BSEC) to introduce these sets of uniform accounting
standards for listed companies in Bangladesh.

This study is based on secondary data which have been obtained from the Published Annual
Reports of selected companies of banks, NBFIs and insurance companies. Companies disclose financial
and non financial information in their annual reports. Each of the company’s website was accessed
through google (www.google.com) and the related annual reports were downloaded for 2014.

International Accounting Standard Committee (IASC) issued accounting standards first in the name of
IAS in 1975. IASC was abolished in 2001 and IASB took over the responsibility of issuing accounting
standards in the name of IFRS.

At present listed companies in more than hundred countries around the world apply IAS /IFRS in
preparing their financial statements. Bangladesh is not far behind; it has integrated the IAS and IFRS to
its local GAAP

Financial statements are the representation of companies’ financial position and performance
as reports, relating to the year they are issued and prepared in. The purpose of these statements is to
give information about the firms’ position, performance, structure, and cash flows that are beneficial to
the investors and other interested parties in making financial decisions

two accounting professional bodies, the Institute of Chartered Accountants of Bangladesh

(ICAB) and the Institute of Cost & Management Accountants of Bangladesh (ICMAB).