Home ›› 27 Oct 2022 ›› Front
Questionable and less quality audits have been affecting the national revenue collection, increasing revenue deficit and tax evasion.
Out of the 41,082 financial statements audited till August 31 this year, 17,041 were audited by only 50 auditors while the rest 24,041 were audited by other 350 auditors which is not acceptable at all, according to the findings of Financial Reporting Council (FRC) under the Finance Division.
As such 41.48 per cent of the total audit reports were prepared by a mere 50 auditors while 58.52 per cent by 350 auditors.
The FRC mentioned this in a letter sent to Institute of Chartered Accountants of Bangladesh (ICAB) which has been assigned by the National Board of Revenue (NBR) to examine the audit reports submitted to it.
“It is quite impossible to maintain quality of audit work as 41.48 per cent of the total audit reports were prepared by only 12.5 per cent auditors,” said the FRC letter sent to ICAB president on September 22 last.
The FRC said due to delay in investigation against auditors preparing questionable audit reports, they are nowadays preparing audit reports without conducting any audit works at all.
“It is affecting revenue collection of the government, bank borrowing management and the stock markets,” it added.
The FRC urged ICAB to take legal procedures against the alleged 50 auditors after investigating the quality of their audit works.
Meanwhile, the FRC has sent 35 letters to the ICAB president since November 21 last informing about questionable audit works of the different firms.
On November 12, 2020, the NBR signed a memorandum of understanding (MoU) with ICAB to verify the audit reports submitted to the income tax department of NBR, using the Document Verification System (DVS) generated by ICAB itself.
NBR officials said the board initiated to work jointly with the ICAB to curb the scope for evasion of direct tax deposited by companies and indirect tax paid by the consumers to the companies. But the NBR is still losing revenue due to some forged audit reports.
If the number of forged audit report reduces, the revenue collection will increase further, they said.
ICAB president Md Shahadat Hossain told The Business Post, “With an aim to ensure international quality audit reports, we are inspecting, investigating and reviewing the audit reports submitted to the NBR on regular basis.”
“If we find any inconsistency in the audit report, we take action. But the procedure takes a little time as there are some steps like initial inspection, reviewing through quality assurance team, referring to the investigation and disciplinary team and taking ultimate measures,” he added.
The Executive director of South Asian Network on Economic Modeling (SANEM) Selim Raihan said, “The auditors have to maintain professionalism and responsibility. At the same time, NBR has to ensure accountability of the auditors.”
“The government loses huge amount of revenue if the auditors do not properly audit the companies and it paves the way to tax and VAT evasion,” he added.
He stressed on strengthening the monitoring of ICAB and the NBR to ensure quality audit reports.
The NBR’s revenue collection in the last financial year was Tk 29,000 crore less than the target while the government’s net borrowing from banking and non-banking sources was Tk 95,582 crore. In the national budget, the government has set a Tk 1,46,335 crore target of domestic borrowing for the FY23.
