The much-debated financial reporting council (FRC) may start functioning anytime soon as the appointment of its chairman now awaits the final seal, sources said Wednesday.
It's an independent watchdog against cooking accounts books of institutions and enterprises. The process of formation of the council is riddled with pitfalls, including opposition from professionals in the accounting and auditing jobs.
Finally, the council law was passed in parliament in September 2015. Executive orders for the formation of the high-powered body also came sometime in 2016, but it remained non-operational for want of its chairman and other key officials.
The FRC is believed to ensure accountability and improve performance of the professional accountants of Bangladesh as it will oversee work of auditors so that such financials cannot be doctored.
More importantly, the council will also monitor financial matters of various government, autonomous and non-government institutions as well.
People familiar with the latest developments said the office of the FRC would be functional soon as they are expecting final approval from the Prime Minister's Office (PMO).
But its office and initial budget are yet to be finalised, they told the FE.
A wing under the Finance Division of the Ministry of Finance has already sent two names for the post of chairman and one will be chosen from the list for four years.
"We've sent the names more than a week back to the PMO and hopefully waiting," said an official involved with the process.
He said there are some procedures that need time to be executed.
The procedural delays also frustrated local think-tank Centre for Policy Dialogue (CPD) as it in its latest media briefing on this matter also urged the government to operationalise the watchdog body.
Earlier in 2016, Finance Minister AMA Muhith had told reporters that the FRC would be formed at the end of the calendar year 2016 under the Financial Reporting Act (FRA).
However, the people involved in the process said after PMO's nod they will issue a gazette notification. After appointment of the chairman he will hire other key people, including its CEO.
They also said framing a budget for maintaining the office of FRC is in the final stage. But its office location is yet to be finalised. Earlier, the government had wanted city's one of the old buildings located at Kakrail crossing.
They, however, hinted that the FRC will be operationalised from the upcoming financial year.
Earlier, a three-member search committee headed by the Comptroller and Auditor General had gone on a search to pick chairman for the council. The committee chose two persons in accordance with the guidelines laid down in the act.
The chairman must have at least 15 years' experience at executive level with degrees in the disciplines of economics, MBA, finance, law and banking. His tenure will be four years.
The council will consist of 12 members representing government, chartered accountants, cost accountants, the national board of revenue and business-promotional organisations.
Under the council will function key wings like standard-setting, financial- reporting monitoring, audit-practice revision, and enforcement divisions.
The FRC will have its own office in Dhaka. Later, the council will set up its office in other places across the country.
Apart from monitoring function of the professional-accounting bodies, one of the key objectives of the council is to raise the trustworthiness of annual financials.
Earlier, the Institute of Chartered Accountants of Bangladesh (ICAB) and the Institute of Cost and Management Accountants of Bangladesh (ICMAB) used to look into the matters.
The FRC will act in setting standards and ethics for chartered accountants and auditors, and formulate new guidelines as per the mandates stipulated in the act.
Local investors and multilateral lending agencies have long demanded a regulatory body to oversee the activities and accounting practices of chartered-accountant firms, many of which allegedly often doctor accounting figures of listed, non-listed and corporate businesses.
The passage of reporting act had been hindered for at least two years as the ICAB opposed the move.
The other members of the FRC will be two additional secretaries from the ministries of finance and commerce, a deputy auditor general, a deputy governor to be nominated by Bangladesh Bank, a member from the National Board of Revenue and a commissioner of the securities and exchange commission, the president of the Institute of Chartered Accountants of Bangladesh, the president of the Institute of Cost and Management Accountants of Bangladesh and the president of the Federation of Bangladesh Chambers of Commerce and Industry, an executive director to be appointed by the Chairman of the FRC, and an accounting professor from a public university.
The council will formulate necessary rules and regulations to monitor auditing practices and ensure compliance with the standards set by the international accounting standards board and the international auditing and assurance standards boards.
After a long delay and dithering, parliament passed the Financial Reporting Act 2015 in September that year.
Back in 2003, the World Bank in a report recommended establishing an independent oversights body. The last caretaker government approved a financial reporting ordinance. However, it was not approved by parliament later on.
In 2012, a financial reporting law was proposed by the community concerned. After three years, the long-awaited law got through.
After establishment of the FRC, all auditors and audit firms must register with the council. Without registration, no auditor and audit firm will be allowed to provide auditing service to any entity involving public interest.