Experts have suggested strong collaboration among banking regulators to bring consistency among local laws and regulations and International Financial Reporting Standards (IFRS) and thereby do away with discrepancies faced in the preparation of financial statements.

They also identified a number of differences regarding components and presentation, cash and cash equivalents, cash flow statement, investment in debt securities, initial recognition and reclassification, provisioning loans and advances, recovery against impaired loans, etc.

The differences prevail because in cases of conflict, the general consensus is for the local laws from primary regulators to prevail, they observed in a press release.

A regulators' 'task force' could be formed to review and identify the gaps and new standards and understand implications while engaging various regulatory bodies with a view to developing an implementation plan of the standards, they said.

Credible and compliant financial statements are critical for Bangladesh at this stage of its graduation from a least developed country (LDC) into a developing one, the experts said.

The Institute of Chartered Accountants of Bangladesh (ICAB), Financial Reporting Council, Bangladesh (FRC) and other regulators could develop a roadmap to align accounting practices in Bangladesh with the IFRS, they suggested. 

The views came at a virtual conference on the "Implementation status of IFRS in Banking Sector in Bangladesh", organised by the ICAB for its members last Saturday.

Addressing the event as chief guest, Bangladesh Bank Deputy Governor Kazi Sayedur Rahman said the confidence of local and foreign investors and depositors of banks and non-banking financial institutions (NBFIs) were largely dependent on a country's accounting system.

Any deviation from international standards, especially the IFRS, should be addressed first, he said.  

Transparency, accountability, true and fair information of financial statements definitely increases the level of confidence, where chartered accountants are instrumental in maintaining compliance to standards applicable in accounting, he further said.

Bangladesh Bank will sit with the ICAB and FRC to narrow the gaps so that a congenial atmosphere could be created to attract foreign direct investment, Rahman said.

Bangladesh Bank expects auditors performing external audits of banks in line with the bank company act to provide information about gross violation or deviations of the lenders in transactions, he said.

They should also forecast probable financial disasters so Bangladesh Bank can take necessary preventive measures, he added.

Mohammad Shams-Ul Islam, managing director and CEO of Agrani Bank, said the IFRS plays a pivotal role in making the accounting language more effective.

Chartered accountants have a responsibility to ensure compliance with the IFRS, the accounting systems and acceptability across the board, he said.

Advancing to become a developed country, the compliance culture and regulatory environment must be conducive to international standards, he added.

ICAB President Muhamudul Hasan Khusru said the Bangladesh Securities and Exchange Commission, Bangladesh Bank, FRC and other regulatory bodies made it compulsory for listed entities, banking companies and other financial institutions to comply with the IFRS.

The ICAB has taken initiatives to identify the deviations to enhance the quality of financial reporting, he said.

The FRC adopted the IFRS in July 2020. Although it had official authority since September 2015 as per Financial Reporting Act 2015, the ICAB performed the responsibility on behalf of the FRC during the transition period.

Md Abdul Kader Joaddar, ICAB vice president and Standard Chartered Bangladesh managing director and chief financial officer, presented a keynote paper while Mohammad Al Maruf Khan, partner at Howladar Yunus & Co, presided over the event.

Syed Mahbubur Rahman, managing director and CEO of Mutual Trust Bank, M Anwarul Karim, executive director-standard setting division; Mohammad Mohiuddin Ahmed, executive director-financial report monitoring division, FRC and Ashraf-Uz-Zaman Ali, director for audit and advisory services at Rahman Rahman Huq, also spoke at the event.