|Posted : 20 Jun, 2014 00:00:00||AA-A+|
Some provisions in the proposed Finance Bill 2014 allowing cost and management accountants (CMAs) apart from chartered accountants (CAs) to audit financial matters of individuals have evoked mixed reaction from professionals and experts.
CAs have sharply opposed the proposed provisions saying that the CMAs were not capable enough to audit the financial statements.
They also say the local and international laws including the Companies Act-1994 do not allow the CMAs to audit, rather they have defined only the "chartered accountants" as "auditors."
However, CMAs have said the proposed provisions would certainly enhance transparency in the country's auditing system. "CMAs have necessary skills and capabilities to deal with auditing," a source said.
The Finance Bill 2014 proposes inclusion of the new sub-section 35(3A) in the Income Tax Ordinance-1984 making it mandatory for every person, not being a company, to submit "audited" financial status with return, if his "gross sales or receipts" from business or profession exceeds Tk 50 million (5 crore).
The provisions also allow CMAs, aside from CAs, to audit individuals' financial status to the mixed reaction from parties on both sides of the divide.
The provisions, amended and inserted in the Income Tax Ordinance include 35(3A), 75(2)(d)(iv), 83(AAA), 107(F), 129(A) and 184(A).
Officials said mainly owners of the partnership and proprietorship firms would come under the provisions.
Mr Showkat Hossain FCA, president of the Institute of Chartered Accountants of Bangladesh (ICAB), said: "They (CMAs) have neither experience nor licence to audit the financial statements. Their job is to deal with cost accounts, not financial statements."
"Even the laws including Companies Act do not permit them to audit financial statements," he said.
Under the proposed provisions, the persons having no audit experience would get a chance to audit and certify financial statements causing a flood of fake audits, Mr Hossain said.
In favour of his point of contention, he mentioned the absence of such practices (audit of financial statement by CMAs) in other countries including India, Pakistan and Sri Lanka.
"There are over 100 laws, where the auditor is defined as chartered accountant," he added.
Citing relevant sections of the companies' acts and ordinances in Bangladesh, India, Sri Lanka and Pakistan, Mr Mahbub Ahmed Siddique FCA, ICAB director (technical), told the FE: "All relevant local and international laws have defined only chartered accountant as auditor."
"Educational systems and syllabuses of the CAs and CMAs are different. As such, expertise and efficiency of both the sections of professionals are different. So, CMAs cannot do the job of CAs," Mr Ahmed said.
Allowing the CMAs to audit financial statements meant merger of the two separate professions and appointing a chemist to do the job of a physician, he said.
"We will not accept it," he added.
Mr Mohammed Salim, president of the Institute of Cost and Management Accountants of Bangladesh (ICMAB), however, said that inclusion of such provisions was expected as it had long been in practice in many other countries including the UK, Canada and Australia.
"It will increase transparency in auditing practices in Bangladesh," Mr Salim said.
Refuting the ICAB allegation, he said: "Separate such professional bodies in many countries including the UK, Canada and Australia are doing the same audit; some of them are seen being merged as it increases synergy."
Mr Salim emphasised such merger in Bangladesh also.
Describing syllabuses for both the sections as "almost equal," he said: "We have skills and capabilities to do it (auditing of financial status)."
The profession of CMAs "is similar to that of CAs", said Mr Jamal Ahmed Choudhury, ICMAB Secretary. "They (CMAs) are currently auditing cost of some selected industries."
Till now only the CAs were doing auditing in Bangladesh's perspective, there were different opinions about quality and standard of the auditing by CAs, he said. "With inclusion of the provisions, we are expecting something better," he added.
He also said: "Most importantly, the proposed provisions are not affected by the Companies Act," as it regulates the public and private limited companies. The proposed provisions were talking about the proprietorship and partnership firms, he added.
When contacted, Mr Wali-ul-Maroof Matin, an expert in corporate governance, said: "It (inclusion of the proposed provisions) is irrelevant; because, the two professions-CA and CMA-are different."
"But, I cannot say why such provisions were included…," added Mr Matin, former CEO of Chittagong Stock Exchange Ltd.
When asked about inclusion of the proposed provisions, Advocate Mosharaf Hossain, a company and fiscal law expert, said: "It will not be violation of other laws."
"Because, Income Tax Ordinance is a special law; it can override all laws except the Constitution and the General Clauses Act," Mr Hossain said.
However, most of the professionals and experts hailed the proposed provisions that brought the 'partnership and proprietorship firms' under the audit system, saying that it would increase transparency.