SMALL AND

MEDIUM
PRACTICES
(SMP)

A ROADMAP FOR
COMPLIANCE
EXCELLENCE
 I R K S I
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1 d a h e a
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TOPICS COVERED d O
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MOHAMMED FORKAN UDDIN FCA, COUNCIL MEMBER - ICAB
c e 2
 INTRODUCTION
We will cover:
Overview of Small and
Medium Practices
(SMPs)
Overview of Small and
Medium Enterprises
(SMEs)
Importance of
Compliance in SMPs

MOHAMMED FORKAN UDDIN FCA, COUNCIL MEMBER - ICAB 3

 OVERVIEW OF SMP

 Small- and Medium-sized Practices (SMPs) are not

merely a subset of the accounting profession; rather,
they represent a critically important and predominant
part of it. Globally, SMPs constitute the vast majority
of accountancy practices.
 IFAC's research highlights that over 95% of
enterprises worldwide fall within the SME category.
These enterprises, in turn, account for approximately
60% of private sector employment, making
substantial contributions to countries' gross domestic
product (GDP)

Source: www.ifac.org
MOHAMMED FORKAN UDDIN FCA, COUNCIL MEMBER - ICAB 4
 SMALL AND MEDIUM ENTERPRISES (SME)

• Lack public accountability • Debt/ Equity Instrument traded in a public market

• Produce general purpose FS • Holds assets in a fiduciary capacity for a broad group of outsiders

Definition: IFRS for SME Public Accountability:

MOHAMMED FORKAN UDDIN FCA, COUNCIL MEMBER - ICAB 5

 GLOBAL KEY STATISTICS

Global Employment Economic

Presence Contributions
•SMEs represent about •These enterprises are crucial
contributors to employment,
90% of businesses accounting for more than 50%
worldwide, showcasing of jobs globally. In emerging
their pervasive influence markets, SMEs generate the
across diverse industries majority of formal
employment, creating 7 out of
and sectors. 10 jobs.
MOHAMMED FORKAN UDDIN FCA, COUNCIL MEMBER - ICAB
Contribution
•Formal SMEs, in particular,
contribute up to 40% of
national income (GDP) in
emerging economies. This
economic significance is even
more pronounced when
informal SMEs are taken into
account.
Source: www.worldbank.org
6
 REGIONAL STATISTICS: SME LANDSCAPE IN SOUTH ASIA

South Asian Number of SMEs SMEs to Total Number of SME Employees SME
Countries (%) Employees to Total (%) Contribution to
GDP (%)

Bangladesh 7,818,565 99.97 24,500,850 85.90 16.40

India 63,387,673 99.90 110,989,000 - 30.30
Nepal 390,493 - 2,808,052 73.50 22.00
Pakistan 5,200,000 98.60 27,324,000 72.00 2.00
Sri Lanka 1,017,267 99.80 2,255,182 75.10 -

Source: Asian Development Bank, December 2021

MOHAMMED FORKAN UDDIN FCA, COUNCIL MEMBER - ICAB 7
 Type of Industry The amount of investment (Replacement Number of employed workers
cost and value of fixed assets, excluding
land and factory buildings)

Cottage Industry Below 10 lakhs Below 16 employees

Micro Industry 10 lakhs to 75 lakhs 16 to 30
Small Industry Manufacturing 75 lakhs to 15 crores 31 to 120
Service 10 lakhs to 2 crores 16 to 50
Medium Industry Manufacturing 15 lakhs to 50 crores 121 to 300
Service 2 cores to 30 crores 51 to 120
Large Industry Manufacturing More than 50 crores More than 300
Service More than 30 crores More than 120
Source: National Industrial Policy, 2016

SME SECTOR IN BANGLADESH Operational Definition of SMEs

MOHAMMED FORKAN UDDIN FCA, COUNCIL MEMBER - ICAB 8

 Type Establishments Total Persons Engaged (TPE)
Total % Urban Rural Total % Male Female
13,168,32 11,759,56
Cottage 6,842,884 87.52 1,730,150 5,112,734 53.75 1,408,762
7 5
Micro 104,007 1.33 41,112 62,895 558,870 2.28 435,043 123,827
Small 859,318 10.99 450,601 408,717 6,600,685 26.94 5,844,088 756,597
Medium 7,106 0.09 4,141 2,965 706,112 2.88 538,526 167,586
Large 5,250 0.07 3,542 1,708 3,466,856 14.15 1,871,910 1,594,946
24,500,85 20,449,13
Total 7,818,565 100 2,229,546 5,589,019 100 4,051,718
0 2
Source: Bangladesh Bureau of Statistics, 2013

SME SECTOR IN BANGLADESH Status of SMEs in Bangladesh

MOHAMMED FORKAN UDDIN FCA, COUNCIL MEMBER - ICAB 9

 IMPORTANCE
OF
COMPLIANCE
IN SMP

MOHAMMED FORKAN UDDIN FCA, COUNCIL MEMBER - ICAB 10

 IMPORTANCE OF COMPLIANCE IN SMP

Legal and Regulatory Adherence

Financial Integrity and Transparency

Risk Mitigation and Business Continuity

Professional Credibility and Reputation

Client Trust and Long-term Relationships

MOHAMMED FORKAN UDDIN FCA, COUNCIL MEMBER - ICAB 11

 IMPORTANCE OF COMPLIANCE IN SMP

Legal and Regulatory Adherence

Financial Integrity and Transparency

Risk Mitigation and Business Continuity

Professional Credibility and Reputation

Client Trust and Long-term Relationships

MOHAMMED FORKAN UDDIN FCA, COUNCIL MEMBER - ICAB 12

 IMPORTANCE OF COMPLIANCE IN SMP

Legal and Regulatory Adherence

Financial Integrity and Transparency

Risk Mitigation and Business Continuity

Professional Credibility and Reputation

Client Trust and Long-term Relationships

MOHAMMED FORKAN UDDIN FCA, COUNCIL MEMBER - ICAB 13

 IMPORTANCE OF COMPLIANCE IN SMP

Legal and Regulatory Adherence

Financial Integrity and Transparency

Risk Mitigation and Business Continuity

Professional Credibility and Reputation

Client Trust and Long-term Relationships

MOHAMMED FORKAN UDDIN FCA, COUNCIL MEMBER - ICAB 14

 IMPORTANCE OF COMPLIANCE IN SMP

Legal and Regulatory Adherence

Financial Integrity and Transparency

Risk Mitigation and Business Continuity

Professional Credibility and Reputation

Client Trust and Long-term Relationships

MOHAMMED FORKAN UDDIN FCA, COUNCIL MEMBER - ICAB 15

 THE REGULATORY LANDSCAPE

MOHAMMED FORKAN UDDIN FCA, COUNCIL MEMBER - ICAB 16

 Financial Reporting Standards Tax Compliance and Regulations

Data Protection and Privacy Ethical Standards and Professional Conduct

GLOBAL REGULATORY LANDSCAPE Regulatory Areas Impacting SMPs

MOHAMMED FORKAN UDDIN FCA, COUNCIL MEMBER - ICAB 17

 FINANCIAL REPORTING STANDARDS:
KEY CHARACTERISTICS OF IFRS FOR SME
Simplification
•The IFRS for SMEs is
intentionally less complex
•Revisions to the IFRS
than full IFRSs. It achieves
this through: - Omitting
irrelevant topics for SMEs -
Limiting accounting policy
choices - Simplifying
principles for recognition and
measurement of assets,
liabilities, income, and
expenses - Reducing
disclosure requirements.
MOHAMMED FORKAN UDDIN FCA, COUNCIL MEMBER - ICAB
Periodic Clear and
Revisions
Translatable
Language
•Certain entities, such as those
•The standard is composed
for SMEs are limited in clear, easily translatable
language. This linguistic
to once every three
clarity facilitates global
years. This approach
understanding and
provides stability and implementation, enabling
allows SMEs to adapt SMEs in diverse regions
to changes without to adopt and adhere to the
frequent disruptions. standards effectively.
Exclusions
with publicly traded securities
and financial institutions like
banks and insurance
companies, are excluded from
the applicability of the IFRS
for SMEs. This targeted
approach ensures that the
standard caters specifically to
the needs of non-publicly
traded SMEs.
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 TAX COMPLIANCE AND REGULATIONS
• Taxation is a complex and ever-evolving facet of
business operations
• Changes occur both at the national and
Dynamic Landscape
international levels, demanding attention to
diverse regulatory frameworks
MOHAMMED FORKAN UDDIN FCA, COUNCIL MEMBER - ICAB
• SMPs must stay vigilant to changes in tax
laws, rates, and compliance requirements
• SMPs act as proactive advisors, staying ahead
Proactive Advisors
of changes to offer timely guidance to SMEs
• SMPs assist SMEs in optimizing their tax
positions and managing risks effectively.
• Tax planning is a strategic imperative for
Optimizing Tax Positions
SMEs seeking profitability and compliance.
• SMPs assist in navigating the complexities of tax
reporting for accurate and timely submissions
• SMPs contribute significantly to SMEs by
Navigating Complexities
offering insightful guidance and fostering a
robust understanding of tax intricacies
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 DATA PROTECTION AND PRIVACY

 While handling a ton of confidential financial data,

SMPs are bound to keep client information secret,
safe, and intact
 SMPs need to set strict rules for how they handle,
store, and send data

MOHAMMED FORKAN UDDIN FCA, COUNCIL MEMBER - ICAB 20

 ETHICAL STANDARDS AND PROFESSIONAL CONDUCT

The
Fundamenta
l Principles

MOHAMMED FORKAN UDDIN FCA, COUNCIL MEMBER - ICAB 21

 ANTI-MONEY LAUNDERING (AML) AND COUNTER-TERRORISM
FINANCING (CTF)

Due Diligence Procedures

SPM shall implement due

diligence procedures
MOHAMMED FORKAN UDDIN FCA, COUNCIL MEMBER - ICAB 22
 TECHNOLOGY AND CYBERSECURITY COMPLIANCE

SMPs shall implement secure financial systems

Protecting client data from cyber threats

Ensuring the confidentiality and integrity of digital financial records

Staying abreast of evolving technological and cybersecurity standards

SMPs shall embrace technology and cybersecurity best practices

MOHAMMED FORKAN UDDIN FCA, COUNCIL MEMBER - ICAB 23

 LICENSING AND PROFESSIONAL STANDARDS

Documentation Risk Assessment

•System of document Process
management •Risk assessment
•Firm infrastructure matrix

Governance & Leadership Relevant Ethical Requirement

•Culture of accountability •Annual independence
MOHAMMED FORKAN UDDIN FCA, COUNCIL MEMBER - ICAB 24
 LOCAL REGULATORY LANDSCAPE: BANGLADESH CASE

Taxation Regulations Company Law and

•Income Tax Corporate Governance
•Value Added Tax •Company Registration
(VAT) •Corporate Governance

Financial Reporting
Standards
MOHAMMED FORKAN UDDIN FCA, COUNCIL MEMBER - ICAB
Labor Laws 25
 KEY CHALLENGES SMPS FACE

Resource Complexity of Technological Competitive

Changing Regulatory Compliance Fatique
Regulatory
Constraints Challenges Landscape Challenges and Burnout
Frameworks

•Personne •Multifacet •Integratio

•Adapta •Pressure to •Overwh
ed n of lower fees
l and requiremen bility elming
technolog •Competiti
expertise ts •Periodic workloa
y on with
•Financial •Cross-
d
•Cybersec revision large and
limitatio jurisdiction
urity foreign •Risk of
ns
al s firms
challenges concerns burnout

MOHAMMED FORKAN UDDIN FCA, COUNCIL MEMBER - ICAB 26

 STRATEGIES FOR OVERCOMING CHALLENGES

• Cross-training • Certralized compliance management • Comprehensive software platforms • Value proposition

• Efficiency and innovation • Establishing Q&A sessions • Feedback Loops • Industry collaborations
• Outsourcing non-core functions • regular training and education • Cloud-based solutions • Client relationship management
• Niche specialization • Utilizing external resources • Agile approach • Networking events

Resource Optimization Strategies Simplifying Compliance Integrating Technology Addressing Competitive Challenges Interactive Q&A Continuous Improvement Collaboration and Networking

MOHAMMED FORKAN UDDIN FCA, COUNCIL MEMBER - ICAB 27

 THANK YOU!
PLEASE FEEL FREE TO GIVE YOUR VALUABLE FEEDBACK

MOHAMMED FORKAN UDDIN FCA, COUNCIL MEMBER - ICAB 28