MOVING TOWARDS - ICAB The monthly news bulletin publishes latest ICAB events mostly of the month it is published. This bulletin also acts as an information hub for the Members to keep

July - September 2019

Moving Tow

ards Nuclear

July - September 2019THE BANGLADESH

TOWARDSMOVING

NUCLEAR

1JULY - SEPTEMBER 2019 | The Bangladesh Accountant

ISSN 1993-3649

EDITORIAL BOARD CONTACT US

ChairmanDr. Md Abu Sayed Khan FCA

Co-ChairmanHarun Mahmud FCA

Members Sidhartha Barua FCA Gopal Chandra Ghosh FCA Amanullah Khan FCA M Idris Ali FCA Masih Malik Chowdhury FCA Md. Anisur Rahman FCA A. K. Gulam Kibria FCA Md. Abdus Salam FCA Moddassar Ahmed Siddique FCA Mohammad Zahid Hossain FCA S. M. Rafiqul Islam FCA Nirmol Chandra Sarker FCA Meer Sajed-Ul Basher FCA Md. Zillur Rahman FCA Md. Jasim Uddin FCA Amiya Bhousan Bhowmik FCA Md. Ali Akther Rezvi FCA Md. Saiful Islam FCA Sk. Md. Tarikul Islam FCA Md. Ismail Rashed FCA Mohammad Fakhrul Alam Patwary FCA Ashraful Haq Amin FCA Sahabub Alam Khan FCA Al Amin Juel FCA Md. Wadud Ahmed FCA Kazi Shah Omar Faruk FCA Md. Farid Uddin FCA Md. Anwar Hossain ACA Ismat Jahan ACA Md. Ziaul Alam ACA Md. Shahidul Islam ACA Md. Abdul Wahab Akanda ACA Ataur Rahman ACA Farhad Hussain ACA Md. Muktadir Hossain ACA Momena Hossain Rupa ACA Md. Saiful Islam ACA

Member SecretaryMohammed Emdadul Haque FCATechnical Advisor, ICAB

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"The opinions expressed in this publication are those of the respective authors themselves and do not necessarily reflect the views of the Editorial Board of the Institute of Chartered Accountants of Bangladesh (ICAB) or ICAB itself."

DISCLAIMER

2 JULY - SEPTEMBER 2019 | The Bangladesh Accountant

ICAB PUBLICATIONS

ContentsJuly - September 2019

P9

for more details, please visit

www.icab.org.bd

P11 Corporate Internal Audit and Compliance Department

Bangladesh Practice

Mohammad Shirajul Islam FCA

P17 Agent Banking for Financial Inclusion and Growth

in Bangladesh

Abdul Wahab FCA

P20 One Single VAT Registration for Taxpayer is Way Forward

Snehasish Barua FCA

P22 Bangladesh Scenario of Listed Banks: Study of Governance

Quality and Capital Structure

1 Asia Khatun 2Mohammed Moin Uddin Reza

P31 Money Laundering and Professionals: Perspective

Bangladesh

Sqn Ldr S M Abu Nayem Ahmed psc (Retd)

P37 Why Tourism Industry of Bangladesh is Lagging

Behind?

M. Idris Ali FCA

P4 Editorial

P7 Interview

P6 President’s Desk

ICAB publications include, inter

alia, a quarterly journal titled 'The

Bangladesh Accountant' and a

monthly mouthpiece 'ICAB News

Bulletin'.

In the quarterly journal articles of

ICAB Members, Members from

other Accountancy bodies,

Academics and Business Leaders

from home and abroad are

published. These articles cover a

wide area of our profession, i.e,

Auditing, Accounting, Financial

and Economic.

The monthly news bulletin

publishes latest ICAB events

mostly of the month it is

published. This bulletin also acts

as an information hub for the

Members to keep up to date what

is happening in and around ICAB.

In addition to these two regular

publications, ICAB also publishes

books, monographs, booklets and

Students’ Study Manuals

regularly.



P43 Green Accounting for Green Economy: An Avant-garde

Challenge for the Present World

M Jalal Hussain FCA

P48 Bangladesh Insight to NPL Fiasco

Masih Malik Chowdhury FCA

P52 Factors Influencing Poverty Alleviation through Tourism

Enterprises: A Study on

Khagrachari District

1Mohammad Omar Faruq 2Dr. Mohammad Badruzzaman Bhuiyan

P62 Prospect of Value Added Reporting and Value Added

Statement in Bangladesh

1Fakhrul Islam 2Mohammad Rakiv

P69 Measurement of Operational Efficiency of Commercial

Banks in Bangladesh

Using Cost to Income

Ratio Approach

Aminul Haque Russel

P77 Monetary Policy : Velocity of Money needs Utmost Attention

Md. Shahadat Hossain FCA

P81 Export Diversification: Critical Agenda for Bangladesh

Mohammad Zahid Hossain FCA

News & Events

News Bulletin

Journal

Circular & Notice

Digital Highlightswww.icab.org.bd

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At present, the economy of Bangladesh is passing through a good time with some favourable indicators of macroeconomic stability. A well-developed financial sector might play a key role in defining a path of economic development characterized by sustainable, long-run economic growth. In order to become an upper middle-income country by 2031 and to achieve high-income country status by 2041, Bangladesh will require huge investments of physical capital, human capital, and innovation enabled by reforms in areas such as financial sector, business regulation, and to address the infrastructure gap.

After being stumbled time to time, present strong and effective steps taken will boost-up our economy through implementation of few significant mega projects. Undoubtedly, these projects will ensure sustainability of our economic growth, human well-being and the achievement of a sustainable future. Now this is the dream of all Bangladeshi individuals who love this country from the core of their heart. This is happening at a time when the global economic outlook remains challenging, and growth is expected to moderate across most of developing Asia.

The power and energy sector is one of the success cases of present time. It has been expanded rapidly over the last one decade particularly with the public expenditure in power and energy sector. This has happened because of undertaking targeted initiatives over the last one decade with a view to come out from the crisis of electricity in the country. The sector is moving towards attaining long term goals for ensuring energy sustainability, at present 80 percent people of Bangladesh have access to electricity facilities. There is enormous demand for electricity, oil, gas and natural resources in agriculture, industry and service sector as well as daily life of Bangladesh. The massive investment plan is also meant to provide uninterrupted power supply, Power Division officials said, adding that the

government is committed to ensuring 100% electricity coverage by 2021.

After initial delay, half of the 10 first track mega projects have finally got some momentum, ushering hope for positive change in the country’s economy and people’s livelihood. The projects are the Padma Bridge, Rooppur Nuclear Power project, the Sonadia Deep Sea Port, Payra Sea Port, the Coal Fired Large Power Projects of Matarbari and Rampal, Metro Rail and LNG Collaboration Terminal. Later on, another project Padma Bridge Rail Link project was included in the fast-track project. The 2400 MW Rooppur Nuclear Power Plant, the biggest single project worth Tk. 1,13,092 crore, 1320 MW Rampal Power project and metro rail are progressing as scheduled. Work of the much-anticipated Padma Bridge is going on in full swing after issues over some of the piers have been addressed while work of the 1200 MW coal-fired power plant in Matarbari of Maheshkhali has witnessed significant progress lately. Work of Rooppur Nuclear Power Plant Project is going on as scheduled. Having begun in 2016, the project is scheduled to be completed within 2025.


“The power and energy sector is one of the success cases of present time. It has been expanded rapidly over the last one decade particularly with the public expenditure in power and energy sector. This has happened because of undertaking targeted initiatives over the last one decade with a view to come out from the crisis of electricity in the country.”

Editorial



Dr. Md. Abu SayedKhan FCAChairman – Editorial BoardCouncil Member - ICAB

Bangladesh is in the process of solving its power deficit problem to ensure smooth economic development as well as wellbeing of the people. Bangladesh’s power sector is one of the fastest growing in South Asia. Even in the recent past the country was almost fully dependent on gas-based power generation. From environmental considerations gas is one of the preferred fuel options, no doubt. But, the source is not unlimited. Rapidly depleting gas reserve compels Bangladesh to go for diversification of its energy mix. In the present world, while planning an energy mix every country needs to actively consider the environmental pollution issues mainly greenhouse effect, which has become one of the greatest threats to our planet. Along with other sources like gas, coal, liquid fuel, renewable resources the country has decided to go for nuclear as well. This is a prudent and pragmatic step by the Government towards meeting up the rising energy demand as well as environmental protection. Rooppur Nuclear Project will be an economic development engine of the country. Undoubtedly it may be told that after completion of this project, our great barrier of development will be reduced. There are many essential businesses those cannot function properly for uninterrupted electricity.

Bangladesh’s rapid urbanization indicates that the demand for electricity will likely see substantial increases. As per World Bank data, around 25% of Bangladesh’s current population lives in urban areas. The power utilities need to be lead players in the city’s future infrastructure, as the government strives to establish Digital Bangladesh, with the objective of converting all major cities to smart cities.

Nevertheless, the power sector in Bangladesh is faced with multiple challenges, which must be overcome to achieve growth. In spite of facing technical and resource constrains, we

seek greater foreign investment to improve the country’s infrastructure. For greater interest of the country as well as to achieve the goals of Vision-2021 and 2041, government should go ahead for completing these infrastructure and Mega Projects. For the greater interest of the country, all the agencies relevant to implement these projects must perform their duties and responsibilities maintaining all ethical standards and code of conducts. Bangladesh’s energy and power sector needs to shift its activities from the ‘emergency management’ (initiated in early 2010s) to ‘market-led’ management (needs to be initiated towards 2021-2030). It needs to reduce lack of transparency, accountability, efficiency, irregularities and corruption. The governance in the power and energy sector institutions needs to be strengthened further. To expedite long term development of the energy sector, the Bangladesh Energy Regulatory Commission (BERC) is carrying out activities for creating favourable environment in electricity generation, energy transmission, transportation and marketing as well as for management and operation of this sector. In addition, the BERC has been working to ensure transparency in tariff fixation, protect consumers’ interests and create competitive market. To uphold accountability and transparency in the energy sector BERC has taken an initiative to introduce Uniform System of Accounts for the all licensees.

Undoubtedly, these projects will ensure sustainability of our economic growth, human well-being and the achievement of a sustainable future. Once the projects are completed, the communication and power sectors will get a huge boost, traffic congestion in Dhaka city will reduce, and ultimately trade and tourism will be benefited immensely. Various studies show that the country’s GDP will increase by 3 to 4 percent after completion of the projects. These steps will be a milestone for our economic progress.

“This is a prudent and pragmatic step by the Government towards meeting up the rising energy demand as well as environmental protection. Rooppur Nuclear Project will be an economic development engine of the country.”

President’s Desk“The economic indicators in the last three months of this fiscal year gives an impression to moving ahead towards year-end target GDP growth. Remittances has increased around 12% in U.S. dollar compared to the same period a year earlier.”

The Bangladesh Accountant’ is an endeavor of the Institute to propagate

knowledge and experience among the

members and the stakeholders. Our

Editorial Board and a team of experts

are relentlessly working to bring out the

informative journal regularly to

facilitate our members and other

stakeholders. The articles published in

July-September issue of the Journal

mainly focus on current critical issues

influencing accounting profession and

all other areas of Bangladesh economy.

There is no doubt, given the challenges

and potentials, ours is a resilient

economy. According to the World

Bank, Bangladesh's economy is the

second after Bhutan, fastest growing

economy in South Asia. This has been

driven mainly by export of readymade

garments, incoming remittances and

the mobilization of domestic resources.

The economic indicators in the last

three months of this fiscal year gives an

impression to moving ahead towards

year-end target of GDP growth.

Remittances has increased around 12%

in U.S. dollar compared to the same

period a year earlier. However, in

July–August, merchandise exports

decreased slightly compared to the

same period a year earlier, largely due

to a small drop in ready-made garment

exports amid a slowing global economy

and aggressive efforts of peer countries

to get market share. However, other

sectors like pharmaceuticals, cement,

food processing, leather and telecoms

registered satisfactory performance.

The initiatives of Government to

diversify export product basket will

reduce the dependence on RMG and hit

country export target of USD 60 Billion

by 2021.

Active steps of Government to

augment FDI are in place. Some

laudable initiatives were taken by the

Government to improve ranking of

Bangladesh in the ease of doing business

index.

Financial reporting has been a

precondition to bring discipline,

accountability and transparency in

financial system of Bangladesh.

Chartered Accountants are continuously

engaging their endeavor to improve the

quality of financial reporting so that the

interest of investors, Government

agencies and consumers are duly

protected.

We welcome all stakeholders to join us in

this noble initiative and let’s work

together to build a hunger-free,

prosperous and corruption-free

Bangladesh.

Thank you. Best Wishes to you all.

A. F. Nesaruddin FCAPresident-ICAB


Mr. Kazi M. Aminul Islam did his Master's of Arts in Economics from University of Dhaka and Master’s in Economics from Boston University, USA. He also attended Mason School at Harvard University. He also obtained Graduation in Environment Management from University of Adelaide, Australia. Mr. Islam has joined Bangladesh Civil Service in 1981 and progressed to higher responsibilities in diverse areas of the Government. He was a secretary to the Chief Advisor’s office during the 2007-08 caretaker government of Bangladesh. While working as the Secretary, Prime Minister’s Office in 2009, he was appointed as Alternative Executive Director of the World Bank for the constituency comprising of Bangladesh, Bhutan, India, and Sri Lanka. He worked for three and a half years on the Board of the Executive Directors of

Interview

The World Bank. In course of work for transition to democracy and private sector development, Mr. Islam steered bodies like “Better Business Forum” and “Regulatory Reform Commission” developed a very strong relationship between the business and Government in Bangladesh. At Bangladesh Investment Development Authority (BIDA) as the Executive Chairman he is focusing on investment climate and investors’ experiences in doing business in Bangladesh and emphasizing on the qualitative aspects of investment regime. These include improving the ‘ease of doing business’ establishing fully functional ‘One Stop Service Centre’ and initiating various reform activities to make BIDA one of the best ‘Investment Promotion Agencies (IPA) in the world.

BIDA HAS BEENWORKING TOIMPROVE THEIMAGE OF THECOUNTRY.IT HAS BEENCAMPAIGNINGTHATBANGLADESHIS NOT ONLYA COUNTRYOF CHEAPWORKFORCEBUT ALSOA COUNTRY OFQUALITYPRODUCTSAND SKILLEDWORKERS.

operates. If the environment is made more enabling and entry and exit are made easier for the foreign investors, it will encourage them to invest in the country concerned.

The Bangladesh Accountant: In terms of amount, what’s BIDA’s target yearly FDI during upcoming years?

Mr. Kazi M. Aminul Islam: We expect the FDI in current Financial Year to touch USD 5 Billion mark which is likely to grow over the periods. This amount of FDI was USD 3.67 billion in last year which was almost 68% higher than the preceding year while global FDI growth declined by 13% in that period.

The Bangladesh Accountant: Existing foreign investors can act as “Investment Ambassadors” for Bangladesh. Do you think these Investors are motivating other Investors to invest in Bangladesh?

Mr. Kazi M. Aminul Islam: Diplomats, CEOs of Multinational Companies operating in Bangladesh and other existing foreign investors have been sharing their real life experience in Bangladesh. Some of them have been very appreciative of the support provided by the investment promoting agencies and also of the ever improving investment climate of Bangladesh.

Mr. Kazi M. Aminul Islam: Of course, we have. Bangladesh is world’s second largest RMG producer which is a clear testimony to our competitive advantages. We have strategic location, expanding domestic market and an economy which is getting more and more integrated with the global economy. Like any other developing country, we are working on the areas where we have issues. Once those issues are addressed, our efficiency and productivity will improve further.

The Bangladesh Accountant: In “Ease of Doing Business” index, Bangladesh ranked 177 out of 190 countries. What are the initiatives taken by BIDA to pull up Bangladesh in first 100 countries by 2021 to meet Government target?

Mr. Kazi M. Aminul Islam: Bangladesh has been a star performer with its impressive GDP growth rate even though we are yet to have higher score in ease of doing business index that we richly deserve. BIDA has formulated massive agenda to improve our rank which has been adopted by different Ministries and Government Agencies. Efforts have also been directed to implementing, monitoring and reporting of the reforms programme undertaken by BIDA in collaboration with various agencies of the Government.

The Bangladesh Accountant: To improve the investment climate, coordination among different Government Ministries is highly important

while it’s missing in many places. How will you evaluate this statement?

Mr. Kazi M. Aminul Islam: BIDA is an affiliated body of Prime Minister’s Office. By using this office’s convening capacity to engage all concerned agencies, BIDA has been working for effectively engaging with relevant ministries and agencies for the improvement of business and investment climate in Bangladesh. In order to have concerted efforts for investment promotion, BIDA has also been working closely with the Cabinet Division of the Government that has been instrumental in engaging the actors and agents throughout the country.

The Bangladesh Accountant: Do you think Bangladesh Missions abroad can play much vital role in showcasing favorable investment environment of Bangladesh?

Mr. Kazi M. Aminul Islam: Of course, they are Bangladesh government away from Bangladesh, they can engage with the people and business houses of foreign countries and the Non Resident Bangladeshis and update them on the excellent investment opportunities that Bangladesh offers.

The Bangladesh Accountant: There are many laws and procedures which are very old, business-unfriendly and bureaucratic as well which are not protecting the interest of foreign investors. Is BIDA working on those?



Kazi M. Aminul Islam

The Interview was taken whenMr. Kazi M. Aminul Islam wasin o�ce as the ExecutiveChairman of BIDA







The Bangladesh Accountant: How will you evaluate the overall investment climate of Bangladesh?

Mr. Kazi M. Aminul Islam: The investment climate of Bangladesh has been improving continuously. Registering a business, getting electricity or a construction permit or other business services are easier today than they were before. Many reforms have been initiated and implemented by the Government to improve the ease of doing business and the foreign investors are responding positively to the improving investment climate in Bangladesh.

The Bangladesh Accountant: What are the key strategies of BIDA to attract FDI (Foreign Direct Investment) which can contribute to country’s development?

Mr. Kazi M. Aminul Islam: BIDA has been working to improve the image of the country. It has been campaigning that Bangladesh is not only a country of cheap workforce but also a country of quality products and skilled workers. We have been engaging with the agents concerned and trying to get the message across that Bangladesh offers immense opportunities for the investors- local and foreign.

The Bangladesh Accountant: Do you think Bangladesh has competitive advantages compared to peer countries including India, Myanmar, Vietnam and Thailand? If yes, what are those?











Interview


invest? Is BIDA thinking to add more sectors to the preferred list of foreign investors?

Mr. Kazi M. Aminul Islam: Investors are keen to invest in the areas of their interest. Power and energy sector and infrastructure are some of the areas where some investors are very keen to invest. We are encouraging them to invest in other areas as well by providing policy support to diversify the economy and also our export basket.

The Bangladesh Accountant: Despite showing initial interest, some foreign investors did not make investment in Bangladesh finally. According to you, what are the reasons for such change of mind?

Mr. Kazi M. Aminul Islam: Upon arrival in Bangladesh, Investors weigh various factors that affect business outcome including the regime for entry and exit and the framework within which business










Mr. Kazi M. Aminul Islam: We have been collaborating with various ministries and agencies for improving the business and investment laws, regulations, processes and procedures especially those relating to the enforcement of contract and resolving of conflicts and settling commercial disputes.

The Bangladesh Accountant: What are crucial factors for foreign investors in taking their investment decisions in Bangladesh?

Mr. Kazi M. Aminul Islam: Infrastructure and logistics are crucial. Besides, availability of skilled labor force, lower cost, and shorter processing time have important bearing on the profitability of business. Luckily for us, we have been making improvements on all these counts.

The Bangladesh Accountant: Which are the sectors or industries where foreign investors are very keen to








Interview taken by:Mohammad Zahid Hossain FCAAssisted by: Md. Mizanur Rahman
















ARTICLESThe Bangladesh Accountant | July-September 2019

www.icab.org.bd

facebook.com/cabdo�cial

requirements of the law. However, the focus by internal audit departments of publicly traded companies on SOX related financial policy and procedures derailed progress made by the profession in the late 20th century toward Larry Sawyer's vision for internal audit. Beginning in about 2010, the IIA once again began advocating for the broader role internal auditing should play in the corporate arena, in keeping with the IPPF's philosophy.

So whatever be the name of these activities, the objectives of the stakeholders are similar in nature from the internal audit or internal control & compliance. Currently, the entrepreneurs are realizing the value of internal audit and internal control & compliance within the organization more than before.

What is Internal Audit and Compliance?

“Internal audit is a dynamic profession involved in helping organisations achieve their objectives. It is concerned with evaluating and improving the effectiveness of risk management, control and governance processes in an organization” as defined by The Institute of Internal Auditors Australia

The term Compliance describes the ability to act according to an order, set of rules or request.

In the context of businesses compliance operates at two levels.

ntroduction

The Internal Auditing profession developed steadily with the progress of management science after World War II. It is conceptually similar in many ways to financial auditing by public accounting firms, quality assurance and banking compliance activities. While some of the audit technique underlying internal auditing is derived from management consulting and public accounting professions, the theory of internal auditing was conceived primarily by Lawrence Sawyer (1911-2002), often referred to as "the father of modern internal auditing"; and the current philosophy, theory and practice of modern internal auditing as defined by the International Professional Practices Framework (IPPF) of the Institute of Internal Auditors owes much to Sawyer's vision. During supremacy of Caliph Omer bin Al Khattab (may Allah(swt) be pleased with him), he implemented the internal and external audit concept among cities that were under his rule at that time. The concept of auditing started to gain importance in the beginning of 20th century when business activities started to grow in size and scope.

With the implementation in the United States of the Sarbanes-Oxley Act of 2002, the profession's exposure and value was enhanced, as many internal auditors possessed the skills required to help companies meet the

The Author is aChartered Accountant and

a Fellow Member of theInstitute of Chartered Accountants

of Bangladesh-ICABand

Senior General ManagerHead of Audit and Tax department

Unique Group of Companies

I

Corporate Internal Audit andCompliance DepartmentBangladesh Practice

Mohammad Shirajul Islam FCA


ARTICLE

• Ensure maintenance of proper records for providing reliable financial, managerial and operating information for d e c i s i o n - m a k i n g , evaluation of activities or publication

• Ensure adequate control of the risks inherent in operations

Organizations face a wide range of uncertain internal and external factors that may affect achievement of their objectives—whether they are strategic, operational, or financial. The effect of this uncertainty on their objectives can be a positive risk (opportunities) or a negative risk (threats). Stockholders are seriously eager to reduce the loopholes and to develop the control environment in the organizations.

Level 1 - compliance with the external rules that are imposed upon an organization as a whole

Level 2 - compliance with internal systems of control that are imposed to achieve compliance with the externally imposed rules.

Objectives of Internal Audit and Compliance

• Ensure achievement of the Group’s objectives, including its stated goals and business targets in an effective and efficient manner

• Ensure economical and effective use of resources and adequately safeguard the Group’s assets against unauthorized use or disposition

• Ensure compliance with applicable legislation and regulations

& printing 03, Telecommunication 02, Travel & leisure 04 and Service & real estate 04.

Every company has its own distinctive personality, just like most humans do. The personality of an organization is referred to as its culture. Organizational culture is invisible, though a powerful force that influences the behavior of members of that group. Organizational culture includes an organization’s expectations, experiences, philosophy, and values that hold it together, and is expressed in its self-image, inner workings, interactions with the outside world, and future expectations.

Every company's Owners, Board of directors want to know the risk factors and non-compliance areas of their company. Beside that they want

Bangladesh will attain middle-income status by 2021 – which it already did – and Bangladesh will leave the LDC group by 2021. Bangladesh Government is willing to establish 100 Economic Zones across the country. There are total 228,071 registered entities under RJSC of Bangladesh (up to Nov. 2018). Out of which Public Limited companies 3462, Private limited companies 161,894, foreign companies 860 and others are societies and partnership firms.

In capital market, at present there are total 313 listed companies under DSE and CSE those are regularly traded in the secondary market. Out of which Bank 30, Insurance 47, Financial institution 23, Cement 07, Ceramics 05, Engineering 37, Food & allied 17, Fuel & power 19, IT 09, Jute 03, Pharmaceuticals & chemicals 31, Textile 53, Paper

Institutions. At present all of the 59 Scheduled and commercial banks and 25 non-banking financial institutions operating in Bangladesh are needed to follow these guidelines strictly.

BSEC Corporate Governance Guidelines

BSEC has a corporate governance guidelines since 2006, which has been amended two times. As per 03, June 2018 amended version. It is mandatory to appoint a separate individual as a Head of Internal Audit and Compliance (HIAC) though there was no detailed description or guidelines for HIAC. In these guidelines BSEC has described about the formation of an audit committee, its constitution, meeting, role, reporting etc. All listed companies of BSEC and DSE, CSE have to maintain these guidelines as compliance matter. These guidelines obviously have been able to contribute in the area of internal control and compliance of the companies.

Other Corporates’ Internal Audit, Internal Control & Compliances Department

As said before, there are 3462 public limited companies, 161,894 private limited companies, 860 foreign companies registered under RJSC Bangladesh. Other than banking and non-banking financial institutions, there are no guidelines or set rules for internal control and compliances of companies. However some multinational companies and some reputed local group of companies maintain their internal guidelines for internal control & compliances based on their business nature and assessed

institutions have to follow these guidelines from September 2015. The guidelines have described almost all areas of internal control and compliance for Banks and Financial

systems depend on the business environment and nature of transactions.

Career Prospect and Opportunity in Internal Audit, Internal Control & Compliance Department in Bangladesh

As said before, different business sectors and their strength are rapidly growing. Entering the middle income country status there are lots of compliances to be maintained by all economic and business entities in Bangladesh. Government is willing to establish 100 economic zone across the country. Its GDP growth rate is expecting 7.90% which is deemed to grow continuously. Therefore it is high time to realize the contribution of the ICC and internal audit department by the entrepreneurs of the business entities. Now – a - days entrepreneurs are hiring a good

number of auditors in the audit or internal control department. There are a big number of audit firms providing their service in the field of internal audit and compliance. Recently entrepreneurs are taking this service through outsourcing system. So, there are lots of job opportunity in this area. Observing the different job portals of Bangladesh now it is clear that huge job demand is creating in this department. Entrepreneurs and management of the corporates now acknowledge the contribution and importance of this department. At present, there are almost 100 professional accountants, CA, CMA, ACCA, CISA, CIA certified have been working in this department as the Head of Internal Audit/ Head of Internal Control & Compliance or equivalent position in different corporates or entities. More than 3000 partly qualified / course completed professional auditors have been serving in this department of different companies. Now employers are highly eager to appoint professionals in this department. Since by nature it’s reporting to the entrepreneurs or BOD, employees of this department get prestigious feelings and respect among others employees of the organizations. So, it can be summed up as this, there are huge opportunities coming up in near future to boost up career in this exciting and challenging area in any corporate house in Bangladesh.

risk. Bangladesh has total 32 Life and 46 Non-Life insurance companies. Insurance Development Regulatory Authority- IDRA is the regulator of this industry. These insurance companies have their own internal audit and compliance department. Some insurance companies have their internal SOPs on the audit system. But IDRA has no guidelines for these companies on the internal control and compliance issues.

Thousands of companies have their internal audit or internal control & compliance department. Their main objectives are to check and verify the day to day vouchers and to find out fraudulent transactions within the operationally controlled areas. But in most of the cases, local companies either it is manufacturing or trading have no written policy or guidelines for this department. The auditing system and controlling

References1. https://www.medium.com :

Internal Audit and

Compliance, the difference

2. https://www.bb.org.bd :

Guidance on internal control &

compliance in banks-

Bangladesh Bank


Internal control and

compliance framework-

Bangladesh Bank

4. https://www.investopedia.com

5. ftp://ftp.repec.org : Global

Markets, Governance and

Internal Control systems.

6. https://www.ifac.org : Risk

Management & Internal

Control

7. https://www.bakertilly.global:

Governance, Risk and

Compliance

8. https://www.roc.gov.bd

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10. https://en.wikipedia.org :

Internal controls, History of

internal auditing

11. https://www.iia.org.au : What

is Internal Audit

12. https://www.iiabd.org

13. https://jurnals.abc.us.org

14. https://www.heritage.org.

Bangladesh Economy:

Population, GDP, Inflation,

Business, Trade and others

15. https://icab.org.bd :

Bangladesh standard on

Quality control review, other

assurance and related service

pronouncement

16. https://mof.gov.bd :

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Bangladesh to become 3rd

fastest growing economy in

world in 2019

Conclusion

It is the combination of people, policies, and procedures that governing bodies and managers rely upon to obtain reasonable assurance that their Board is meeting its objectives in regard to effectiveness, efficiency, the safeguarding of assets, the reliability of reporting and compliance. The primary responsibility for internal control rests with management. Addressing the fundamentals of business entities like processing, production, operations, banking, financing, accounting, marketing, research & developing, human resourcing- it has been found that internal controls & compliances department is commonly appreciated by the management with all admiration. In some aspects it is more treasured than others to them. Ignoring the significance of internal audit, internal control & compliance no corporate house will be able to sustain in global competitive market in the long run. In parallel to incremental business opportunities in Bangladesh, huge job opportunities are being created for business graduates and professionals. Corporates are now serious to strengthen their internal control environment and compliance matters. It is essential that IDRA adopts the guidelines for insurance companies and BSEC may issue the guidelines for internal control & compliance for the listed entities, as well.







ntroduction



Internal Auditors’ Role in the Organization

Internal auditors work across all areas of an organization. In addition to core areas of financial control and IT, they review the tangible aspects of operations, such as an organization’s supply chain or IT systems; as well as more intangible aspects such as organizational culture and ethics. In fact, any system that has an impact on the effective operation of an organization may be included in internal audit’s scope. Internal audit reports are presented to the CEO and board (via the audit committee) as they provide an independent viewpoint on the extent to which an organization is poised for success and advice on areas for improvement.

Internal Audit, Internal Control and Compliance – Bangladeshi companies’ Practices

Bangladesh is among the five fastest-growing economies of the world with a 7.3% GDP growth projection in the FY2019. Bangladesh economy continues to be among the fastest growing economies in the world due to stable macro and export-oriented industry-led growth, the World Bank report said. Bangladesh will be the third fastest growing economy in the world in terms of achieving high Gross Domestic Product (GDP) in 2019, according to a United Nations report.











Corporate Internal Audit and Compliance DepartmentBangladesh Practice



















Internal Audit and





Bangladesh Bank




Bangladesh Bank







Control



Compliance





internal auditing


is Internal Audit




Bangladesh Economy:







pronouncement






world in 2019

Conclusion








ntroduction




ARTICLE










to know from internal auditors who are contributing in the cost reduction area, budget controlling area, inventory and process control area. But it is the practice of local corporate bodies’ internal audit department or internal control & compliance department whatever it is by name, to control and check compliance while transactions done through the pre auditing approaches. Some companies follow the post auditing and surprise auditing approaches also. But the controlling environment and procedures diverge from company to company and organization to organization. Most of the companies do not have any guidelines and work manual for the internal audit or internal control & compliance department. Some good reputed corporate entities are practicing their SOPs for the internal control & compliance activities. There are quite a good number of audit firms providing their services in the field of internal audit and compliance. Recently, entrepreneurs are taking this service through outsourcing system.

Bangladesh Bank Guidelines on Internal Control and Compliance 2015

Bangladesh Bank, regulator of all commercial banks and non-banking financial sector in Bangladesh has adopted a guidelines on Internal Control and Compliance in Bank in September2015. All scheduled and commercial banks and non-banking financial



















Internal Audit and





Bangladesh Bank




Bangladesh Bank







Control



Compliance





internal auditing


is Internal Audit




Bangladesh Economy:







pronouncement






world in 2019

Conclusion








ntroduction













Corporate Internal Audit and Compliance DepartmentBangladesh Practice















number of auditors in the audit or internal control department. There are a big number of audit firms providing their service in the field of internal audit and compliance. Recently entrepreneurs are ta

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