Accounting Term Paper

The Prospects of Accounting Professions in Bangladesh 2011

The objectives of a university establishment at present times are two- to educate young

scholars in thousands and to delay the entry of those thousands into the job markets, as

full time employees. This is so because the existent job markets do not exactly suffer

from lack of people looking for employment. And with the current stressful economic

conditions throughout the world, quality jobs with a lucrative paycheck can prove to be

an elusive hunt to catch. Thus, it is never too early or a waste of time to do some

advanced research on the job prospects related to a certain academic field, worldwide or

at a national level. Therefore, even though our topic of research is ‘Prospects of

Accounting Professions in Bangladesh’, we have also taken a look at its worldwide

popularity besides keeping a close watch on national prospects, in the hope that we may

prosper in any part of the world, should we decide upon an accountancy profession in the

future.

WORLD OVERVIEW

The Early Years of Accounting:

Accounting has evolved, as have medicine, law, and other professions, in response to the

social and economic needs of society. For the most part, early accounting dealt only with

meeting the financial information needs of a relatively few owners of business

enterprises. As business and society became more complex over the years, the

accounting function expanded in order to meet the needs of a variety of interested parties.

The two major users of accounting information may be referred to as internal users and

external users. The management of the entity is an internal user; all other users, such as

investors, creditors, labor, and governmental bodies, are external users of accounting

information.

The different information needs of the various decision makers results in two related, but

different accounting reporting systems. The accounting system used to provide

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information to the management of an entity is referred to as managerial accounting. The

accounting system used to provide information to external users is referred to as financial

accounting. It should be pointed out that there is not a complete separation between the

managerial and financial accounting systems. The primary accounting records are for the

preparation of the financial statements, which are directly or indirectly required by law.

Much of the accounting information for managerial decision making comes from those

records. Moreover, management is responsible for the content of financial accounting

statements. Also, management is obviously concerned about the financial statements,

since these statements are often used to evaluate management. In addition, external users

would probably want to have much of the economic information referred to as

managerial accounting, but such information is not provided externally because it would

be available to competitors; hence it is viewed as confidential information. Finally, the

term financial accounting is somewhat misleading because all accounting is financial in

that it is stated in monetary terms.

Prospects of Accounting Profession:

Accountants are involved in different levels of management. From simple recording of

transactions to preparation of financial statements and report, to business analysis and

even to controllership, accounting professionals flock the corporate ladder. They

participate in cost efficiency measures, consensus of mergers and acquisitions, total

quality management, development of information systems and tax management.

Future Prospect of Accountants:

Economic Growth

Development of Financial Industry

Market Development of a country

Role of Accountants in the Future Economic Growth

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Average 6% GDP growth

Continuous expansion of economy

Demand for commercial services increases

Accounting profession benefits from economic expansion

Development of Financial Sector:

CE emphasizes financial sector

Supportive governmental actions

Profits tax cut

Frequent promotion of different financial services in overseas countries

Number of enterprises increases

Demand for accounting service increases Lack of Talent

Shortage of talents still exists

Accountants shift to other sectors

Big accounting firms absorb a lot of talent

Small and medium size firms fail to compete for talent

New accountants fail to fill up vacancies

Different Roles of Accountants:

Traditional roles

Auditing

Accounting

Tax advice

Additional Roles

Management Consultant

Financial Planner Auditing

Most profitable field in the past

Now facing more challenges

Professional liability risk

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Stricter regulatory system

Competition and auditing agents

More complex accounting standards

Accounting Standards:

Quality services expected

Strict accounting standards developed

Development of Small GAAP for SMEs

Difficult for accountants

More than one set of standards

Frequent changes

Time needed to become familiar with all sets of standards Accounting Service

Traditional roles of accountants are facing more and more difficulties. Accountants are

relying only on traditional services and would face a diminishing future career. Value

added services are needed to preserve competitiveness. New accountants should focus on

prospective fields

Other Challenges:

Long working hours

Accountants in big accounting firms always face long working hours

Difficult to solve in foreseeable future

New accountants should be prepared

Less promotion chance and income in top positions

Broader scope of knowledge

Professional knowledge

Current issues

Corporate cultural issues

Communication skills

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Physically and psychologically prepared

High working pressure

Long working hours Conclusion

Accounting profession generally has good prospects in the future

Risks and challenges are faced by traditional field of accounting services

New value added services are key to future success of accountants

New accountants should be well prepared for the bright career path in the

accounting profession

The Development of International Accounting Standards:

Accompanying the movement to a global economy has been the development of an

international capital market. A U.S. company in need of funds, for example, may seek

financing in one or more foreign countries, or a foreign company may seek financing in

the United States. Similarly, a U.S. investor may invest in foreign securities, or a foreign

investor may invest in U.S. securities. The movement of capital across borders is sizable.

A major problem that exists relates to differences in accounting principles and practices,

which are peculiar to a particular foreign country in which operations are conducted.

Significant advantages are expected to be achieved if a universally applicable system of

accounting principles were adopted.

“Global Accounting” Phenomenon

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The term “global accounting” is often used lately to describe the phenomenon of widely

use of the IAS/IFRS and their adoption by more and more countries and institutions.

Complying with the international standards or preparing domestic standards which

conform with the IAS/IFRS has created a vast area of identical or similar accounting and

financial reporting rules that facilitates the flow of capital and increased investments thus

reducing considerably the costs of converting from one set of rules to another. In this era

of “global finance” and “global markets” the “global accounting” was a must and a due

necessity.

Nevertheless one can question if the “global accounting” is the right trend for small

countries with mainly small businesses like Bangladesh. A noticeable trade-off between

the cost and benefits of adopting internationally compliable standards has been a field of

debate among practitioners and academics even in Bangladesh. “Global accounting” is

costly especially for small countries like Bangladesh that don’t have an active capital

market that would benefit from better accounting rules and more transparent financial

information. Still we believe that the initial technical difficulties and expensive

requirements will pay off in the long-run future.

Efforts to Develop Worldwide Accounting Standards:

Most countries recognize the need for more uniform accounting standards. Probably the

best hopes for finding areas of agreement among all the different countries are the

International Accounting Standards Board (IASB) and the International Federation of

Accountants (IFAC). The International Accounting Standards Committee IASC was

formed in 1973 as a result of an agreement by accountancy bodies in Australia, Canada,

France, Germany, Japan, Mexico, the Netherlands, the United Kingdom and Ireland, and

the United States. At the beginning of 2001, the IASC appointed a new International

Accounting Standards Board (IASB) with the responsibility of working toward a single

set of high-quality global accounting standards. The role of the IASB is to contribute to

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the development and adoption of accounting principles that are relevant, balanced, and

comparable throughout the world by formulating and publicizing accounting standards

and encouraging their observance in the presentation of financial statements. The IASC

was especially helpful to companies in developing economies that did not have the

financial history or resources to develop accounting standards.

The IFAC, which was formed in 1977 and also consists of most of the world’s

accountancy organizations, fully supports the work of the IASB and recognizes the IASB

as the sole body having responsibility and authority to issue pronouncements on

international accounting standards. The IFAC’s objective is to develop international

guidelines for auditing, ethics, education, and management accounting.

Advantages of Universally Applicable Standards:

The successful development of and convergence toward high-quality internationally

accepted accounting standards will provide direct benefits to auditors, users, preparers

and regulators of financial information and statements. More generally, the availability of

common and more reliable financial data should facilitate international investment and

reduce the cost of capital worldwide. Accounting costs for multinational firms operating

in different jurisdictions will be reduced with the narrowing and eventual elimination of

national differences. Regulators will benefit from the greater consistency and quality of

information.

Despite this and other benefits that could be achieved by the international harmonization

of accounting practices, those attempting to achieve an internationalization of accounting

standards have encountered numerous barriers.

Barriers to Harmonization:

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The most serious barriers to harmonization of accounting standards are

Cultural Differences - Countries differ in economic environment, political structure,

and language. These differences contribute to the diversity in accounting principles

among countries, and this diversity makes it harder to agree on a common set of

principles. An economic environment with a high rate of inflation, for example, may

generate an accounting principle that requires inflation adjustments to the financial

statements, but a country with a low inflation rate may not require such adjustments.

Some political systems place more emphasis on private ownership of property than do

other systems, and this may lead to differences in accounting principles. The

relationship between tax law and accounting principles also differs among countries.

In some countries, financial statements must conform to tax returns, but in other

countries, tax returns and financial statements may differ significantly. Language

differences also create problems in establishing a uniformly understood set of

international accounting principles. Accounting contains many technical terms and

not all languages can easily assimilate the fine points of technical definitions.

Difference In National Principle-Setting Bodies - The nature of the group with

primary responsibility for formulating accounting principles varies from one country

to the next. The group may be a committee in the private sector, or it may be a

governmental body. The group’s membership may consist of accountants only, or it

may be a mix of accountants and non accountants. A governmental body containing

non accountants is likely to have a different perspective about appropriate accounting

principles than is a private-sector committee composed of accountants only.

Nationalism - A strong national principle-setting group, for example, may not want

its role to be only that of advocate for its country’s interests at the international level.

Concerns about compromise and future roles create a tendency in principle-setting

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bodies to resist, or slow down, the movement toward international harmonization of

accounting principles.

Legal Enforcement - The IASB has no legal power to establish accounting standards

and therefore must rely on the voluntary actions of member bodies and other groups

to support and enforce its standards.

The road to international harmony is a difficult one. However, there is reason for

optimism because an increasing number of countries are recognizing the appropriateness

of international accounting standards in international trade and commerce.

FUTURE OF ACCOUNTANCY IN BANGLADESH

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In Bangladesh the profession of accountancy developed during the British colonial period

and is represented by two professional bodies, the Institute of Cost & Management

Accountants of Bangladesh (ICMAB), and the Institute of Chartered Accountants of

Bangladesh (ICAB). The GAAP in Bangladesh are based upon standards set by the

ICAB, which has stated its intention to adopt the International Financial Reporting

Standards As of 2001, 23 such standards had already been adopted, and listed companies

are required to use the IFRS. So the road to international harmony in accounting practices

is paved for Bangladesh.

Since accountancy is a critical component of the infrastructure for the Bangladeshi

market economy, no economically sound activity would be possible without accountancy.

Beyond the information it provides on the financial position and profitability of

operations, it is the foundation of countries' fiscal systems and it plays a key role in

corporate governance. Accountancy is relied on when enforcing prudential management

requirements for banks, insurance companies, securities dealers, and other market

participants. As a result, the accountancy sector is among the most regulated in the

world's advanced economies in terms of its liabilities towards to the society. Appropriate

accountancy can ensure accountability for finances, fairness, and performances and

prescribe way to guarantee good governance by institutionalizing a powerful

accountability structure that holds every public and private sector official answerable for

his or her actions as public or corporate official.

Thus, keeping the importance of accountancy in mind, Bangladesh too has many

accounting jobs to offer. Finance and accounting, along with marketing and sales sector

employs a large number of people in Bangladesh. The sector of finance is one of the most

developing sectors in Bangladesh at present. Due to its stable economic growth, a large

number of accounting and financial organizations are opening and have opened its

branches in Bangladesh. Presently due to the stable condition of this sector, Bangladesh

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government is trying to improve pays and perks for this sector specially. Along with this

a large number of private organizations have come up now.

So there accounting jobs available in four main categories: public accounting,

management accounting, government accounting and internal auditing.

Public Accounting:

Public accounting jobs offer the broadest and most varied type of accounting tasks.

Public accountants practice bookkeeping, financial analysis and account management

services for their clients, whether they are individuals, private businesses, public firms,

government agencies or not-for-profit organizations. A public accounting business can be

one accountant, a partnership involving two or more accountants, or a firm containing

hundreds of accountants.

The duties carried out by the various types of public accountants range from simple tax

preparation and advice, to consultations in the areas of employee compensation and

accounting system design. Some public accountants are involved in external auditing,

where they audit their clients' financial records to ensure statements have been handled

properly, reporting their findings to investors and authorities. These accountants

primarily look at historical financial data, discovering problems or errors in retrospect.

Management Accounting:

Management accountants are also known as private accountants, or cost, industrial or

corporate accountants. Rather than offering their services to the general public, this type

of accountant is employed by a business or agency for the purpose of recording and

analyzing the company's financial data. The accountant uses this data to carry out tasks

such as asset management, budgeting, performance evaluation and cost management.

They are often involved in budgeting for the release of new products, as well as in

preparing financial data for investors and tax authorities. As opposed to public

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accountants, management accountants primarily look at past and current data in order to

plan for the future.

Certified Public Accountants can be employed by the private sector in positions such as

Chief Financial Officer (CFO) or CEO, provided they are fully skilled in business

practice.

Government Accounting:

Government accounting is a form of public accounting, applied to government agencies

and private businesses that are subject to government regulations. Accountants in this

field perform public accounting duties for these agencies, making sure revenues and

expenditures are carried out according to law. Accountants employed by the Federal

Government can be part of the IRS, or can be involved in budgeting and government

asset management.

Internal Auditing:

Internal auditing accountants review their company or firm's financial management

practices, checking for mismanagement, fraud and waste. They evaluate the company's

budgeting and management systems and operations for performance, efficiency, and

compliance to laws and regulations. Under this designation, internal auditing accountants

may specialize in areas such as information technology auditing, compliance auditing or

environmental auditing. Some of the posts offered to carry out accounting and finance

jobs in Bangladesh are as follows:

Business development manager

Financial sales consultants

Financial controller

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Book keeper

Bank official

Management accountant

Manager (internal audit)

Financial consultant (mortgage)

General manager (finance)

Senior accounts officer

Commercial executive

Share manager

Management trainee officer

Social mobilizer

Director/Deputy director (finance)

Audit officer

Accountant

Credit inspector

Cost accountant

Finance and administration assistant

Assistant financial controller

Qualifications :

The job seeker must be from the commerce background. The candidate must be an

M.Com/ MBA (Accounting/Finance)/ACA/ FCA/ ACMA/ FCMA/.Candidates should

also have people management skills, should be able to work along with other departments

in the organization, must have time management /prioritization skills, must have the

knowledge of advanced ERP. In case of some posts, the employee will have to prepare

monthly cash flow records and also have to manage the working capital. The job seeker

must also be able to review the balance sheet and should be able to prepare various

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monthly financial reporting schedules. The candidate should also have good knowledge

of computers and should have good communication skills, both oral and written.

Work Experience :

Work experience required for finance and accounting jobs in Bangladesh is at least 2-3

years. For higher posts substantial experience is required. Some companies even demand

up to 10 -12 years of experience. The applicants should have the experience in accounts,

finance, audit, tax which includes VAT, customs duty, income tax etc.

Working Hours :

Nothing is mentioned about the working hours for the finance and accounting jobs in

Bangladesh. All the jobs in this sector are full time jobs.

Pay Scale :

The pay scale for finance and accounting jobs in Bangladesh are not specified but they

are according to the industry standards and also depend upon the qualification and

experience of the job seeker.

Chartered Accountancy:

Aside from these posts, Chartered Accountancy (CA) has emerged as a unique profession

of capital importance and is now discussed at various economic seminars, capital

markets, investments and such other forums. To cope with the increasing demand in the

field of economy, innovative financial instruments are being constantly introduced and

the profession world-wide, apart from accounting, taxation, financial management and

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other financial consultancy is in the forefront in launching these financial products. The

qualification of a Chartered Accountant is being increasingly acclaimed as the “best”

professional qualification in this millennium of free market economy and globalization of

trade and services. Education and training system of Chartered Accountants is such that

after qualifying, a Chartered Accountant may go for public practice either on his/her own

or in partnership with other Chartered Accountant(s) or he/she may go for employment in

trade, commerce, industry, finance, etc.

In today’s free globalized world, Chartered Accountants are in public practice, in all

sizes of accounting firm from sole practitioners to affiliates of large international firms.

They are also employed in industries, finance and commerce playing a wide variety of

financial, management and senior policy making roles both at home and abroad. The

members of the Institute of Chartered Accountants of Bangladesh are known as the

Chartered Accountants of Bangladesh.

The objectives of Chartered Accountancy in the national level are:

Regulates the accounting Profession and matters concerned there with in the

country

Administers its members and students

Ensures sound professional ethics and code of conduct by its members

Provides specialized training and professional expertise in Accounting, Auditing,

Taxation, Corporate Laws, Management Consultancy, Information Technology

and related subjects

Imparts Mandatory continuing Professional Education (CPE) to its members

Fosters acceptance and observance of International Accounting

Standards(IAS)and International Standards on Auditing (ISA)and adopt IAS &

ISA in Bangladesh as Bangladesh Accounting Standards(BAS)and Bangladesh

Standards on Auditing (BSA) respectively

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Keeps abreast of latest developments in Accounting techniques, Audit

methodology, Information technology , Management consultancy and related

fields

Liaises with regional and international organizations to influence the development

of efficient capital markets and international trade in services.

Chartered Accountancy is also driven by a mission.

“To provide leadership in the development,

Enhancement and coordination of the

Accountancy profession in Bangladesh”

Benefits of being a Chartered Accountant:

A Chartered Accountant is a Professional who is trained in and possesses the expertise to

perform the various types of work such as Accounting, Taxation, Auditing, Financial

Management, Project Appraisal, MIS, IT, Computer Auditing, Consultancy etc. In

certain areas, like audit, they have the monopoly.

The practicing Chartered Accountants mainly carry out audit, inter alia, of financial

statements of various enterprises/organizations as Public Accountants under the banners

of approved Chartered Accountant Firms.

Chartered Accountants engaged in public practice mainly carry out the following

functions:

Perform professional services involving auditing or verification of financial

transactions, books, accounts or records, or preparation, verification or

certification of financial, accounting and related statements;

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Render professional services or assistance in or about matters of principles or

details relating to accounting procedures, costing techniques, or recording,

presentation or certification of financial facts or data;

Render professional services or assistance as Management Consultant in or about

matters of accounting methods, systems and techniques involving forecasting, in

order to assist management in its task of formulating policies, programmes,

management systems and procedures for maintaining and improving efficiency.

Management Consultancy services encompass, inter alia, the following areas:

Valuation of business and shares

Designing of accounting, internal control and operational systems for

organization. Rendering of services like maintaining computerized financial

accounts of companies, business process re-engineering, management selection

and recruitment, disinvestment of government enterprises, etc.

Apart from these CA Firms are also engaged in:

1. Taxation services

2. Business Information System (BIS)

3. Statutory and Liquidation services, etc.

Many positions of trust and responsibility are open to a Chartered Accountant such as

Chief Executive, Member Finance, Finance Director, Company Secretary, Chief

Accountant, Finance Controller, Systems Analyst, Internal Auditor, Accountant, etc. in

Listed Companies, Corporations/ Autonomous bodies or in industrial, financial,

commercial or educational enterprises.

A Chartered Accountant can also serve on the Board of Directors of various

organizations, particularly financial institutions. Such positions of responsibility, trust,

honour and dignity are offered to Chartered Accountants because of their excellent

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educational & training background, professional know-how & technical expertise and

sound financial knowledge & experience, enable them to contribute towards solving

accounting, financial, educational and business problems at top levels.

Linkage to International bodies:

The Institute is a permanent active member of several International and Regional

Accounting Bodies like:

International Federation of Accountants (IFAC), the apex body of the accounting

profession in the world and sole authority for adoption and implementation of

Auditing Standards Ethics etc.

International Accounting Standards Committee (IASC),the sole custodian for

adoption and implementation of Uniform Accounting Standards for member

countries

Founder member of South Asian Federation of Accountants (SAFA), the

Regional Accounting Organization of South Asia

Confederation of Asian and Pacific Accountants(CAPA)

International Accounting Standards Boards(IASB)

Moreover, the Institute has to make liaison with various government agencies, local and

international Chamber Bodies and business houses.

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Career Prospects in Comparison with other Professions:

CA is an internationally relevant and accessible qualification – a go-anywhere passport to

a successful career. In an age of growing globalization and intensified competition,

modern business demands timely and accurate financial information. That is why CAs’

are sought after by companies across the world. They are commercial business managers

with wide-ranging skills. With this globalization, the world economic scenario is rapidly

evolving. Innovative financial instruments are being constantly introduced in the twenty

first century, and the Chartered Accountancy (CA) Profession world-wide is in the

forefront in launching these financial products. Chartered Accountancy (CA) has

emerged as a unique profession of paramount importance. Anybody will find Chartered

Accountancy as a satisfying and rewarding profession. Apart from exciting opportunities

and attractive pay-packages, Chartered Accountancy qualification is recognized

internationally, and its reputation and value are maintained through high standards of

assessment and regulation. It is the professional qualification of choice for businesses

worldwide.

The profession of Chartered Accountancy is looked upon with great honour and dignity.

Chartered Accountants have developed this over the years through sincerity, devotion,

and integrity. Business promoters and owners cannot deal with every detail of their

business. The People they employ to conduct their business do a lot of things on each of

those where they cannot lay their finger tips. Promoters and owners engage Public

Accountants to let them know net results of their business activities and repose full

confidence in Public Accountants to dig out truths, where necessary.

Due to the increasing demand for their services, the average earnings/remuneration

packages of Chartered Accountants have also steadily increased in recent past. Hence a

student, on successful completion of examinations and training, could look forward to a

comfortable compensation package.

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Today’s world is governed by commerce and trade. Only the Chartered Accountants can

control the matters related to commerce and trade. So there is an increasing demand of

Chartered Accountants worldwide. And that is why the Chartered Accountancy is best

among all other professions.

Chartered Accountancy in Bangladesh:

In Bangladesh where resources are limited, support of the government for starting an

activity at national level is greatly needed. Government of Bangladesh has given total

support to the development of accounting profession in the country. Policy makers of the

country are taking keen interest in the activities of the profession.

Chartered Accountancy is the most lucrative and remunerative job, not only in

Bangladesh but, over the world. ICAB is the only organization to train the most

prestigious professionals and to regulate Chartered Accountancy profession in the

country. During the year 2007-2008, the Institute granted registration to 1257 students for

Article ship, 1064 students completed their Article ship training and 28 Articled Students

discontinued Article ship due to various reasons. In the second half of 2008, 614 students

were registered for Article ship with the Institute.

Though it is apparent that the path for accomplishment of the C.A. qualification is not an

easy task, but with the unique combination of rich inputs and active processes in a

supportive environment has been made by ICAB, the results is now well worth your

endeavors and CA profession has become preferential one day by day. ICAB has now

grown to a membership size of 914 of which 662 are Fellow Members and the rest 252

are Associate Members.

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Females are also playing a vital role as Chartered Accountants in Bangladesh and taking

leading role gradually to become co-partner of the profession. ICAB has 26 female

members (as on 18 February 2009) who are occupying the high ranking positions in CA

firms, NGOs and international organizations like, the World Bank. Female students are

increasing tremendously and are becoming matured adequately. ICAB wishes to have

many more qualified (and part-qualified) female Chartered Accountants in the near

future.

Significance of the ACCA:

As our research shows, the prospects of Chartered Accountancy jobs in Bangladesh

appears promising as our country is one of ACCA’s (Association of Certified Chartered

Accountants) fastest-growing markets – and not surprisingly, given a population of

around 150 million, all keen for their country to grow and succeed. The ACCA increases

employability and buoys up the chances of job availability as ACCA students benefit

from the flexible range of entry points meaning they can begin at the right level for them,

and then progress through the awards. And when it comes to flexibility, they can

complete qualifications in their own time, selecting those which best suit their own career

needs and aspirations. ACCA says the practical content means that the knowledge the

students gain is directly applied to the workplace, offering immediate benefits to existing

and prospective employers.

Conclusion:

Hence, in the light of our research, we are happy to conclude that the accountancy job

prospects in our country are very bright and worthwhile to be pursued. With so many

different kinds of jobs and the need for accountancy in every sector, plus the quality

education and training available to be adept in accountancy, make the accounting job

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outlook blooming, both in national and international levels. And the rosy future of

accountants does not look as though it would lack luster any time soon.

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