An organisation or institution with 50 employees will now be considered as a public organisation or institution as the government has changed the definition of public organisation or institution.
These organisations or institutions must follow all the financial standards set as per the Financial Reporting Act, according to a gazette notification issued recently.
Additionally, Financial Reporting Council (FRC) officials can seek information about the employees’ list, recruitment rules, recruitment and salary circulars, payroll, account statement, financial statement, audit report, provident and gratuity fund or other information.
FRC can take action if the law is violated. After verifying this information, the council will list the institutions concerned as public interest organisations.
Further changes were made to the Financial Reporting Council's definition of a public interest organisation in February this year.
It said that if annual revenue is Tk 50 crore, total assets of Tk 30 crore and liability of Tk 10 crore excluding shareholders' equity, it will be considered as a public interest organisation.
It has increased the amount of revenue, assets and liabilities as compared to earlier. This has resulted in many organisations being exempted from the obligation to follow financial standards under the Act.
This term was fixed in June 2020. At that time, it was said that if it has an annual revenue of Tk 5 crore, total assets of Tk 3 crore and liabilities of Tk 1 crore excluding shareholder's equity, it will be considered as a public interest organisation. According to this definition, more institutions in the country were covered.
Accordingly, the Financial Reporting Act, 2015 was enacted to bring the financial activities of public interest organisations under a well-regulated framework, to establish a council for formulation of accounting and auditing profession standards, due diligence, implementation, supervision and other related functions.
Under this law, the 12-member council is working under its supervision and accountability over the financial activities of all the public interest organizations of the country.
Since December 21, 2020, the FRC made it mandatory for auditors to sign the audit reports of public interest organisations. In a notification issued at the time, the FRC said that a review of the audit report found that different audit firms were signing audit reports in different ways. It requires the auditor to sign his name to ensure uniform audit practice, transparency, accountability and due diligence in audit work.
In addition, the FRC believes that an auditor should sign the report in his own name to avoid confusion among the users of the audit report.
Till now, three alternative methods of signing the audit report were followed. The options are to sign your own name, sign the firm's name or sign the audit report under both names.
On September 6, 2015, the Financial Reporting Act 2015 Bill was passed in the Parliament with the aim of establishing the Financial Reporting Council to ensure transparency and accountability of the work of non-governmental organisations and government autonomous organisations, including NGOs engaged in the public interest, to establish order in the financial system.
Former Finance Minister Abul Maal Abdul Muhith proposed to pass the bill and it was passed by voice vote.
To ensure transparency and accountability in the preparation of financial reports, accounting and auditing of corporates, public corporations, government autonomous bodies, NGOs, banks, financial and insurance institutions and other institutions, the government took the initiative to form a neutral regulatory body called the Financial Reporting Council by enacting the Financial Reporting Act.
Ensuring transparency in financial reporting will boost investors’ confidence. Besides, foreign investors will get encouraged to invest jointly in Bangladesh.
