FRC listing mandatory for CAs

Chartered accountants (CAs) or CA firms are now legally required to get listed and licensed with the Financial Reporting Council (FRC) to carry out accounting activities, and they must adhere to specific conditions to keep their auditing privileges.

FRC – the sole authority for accounting, auditing, and actuarial valuation standard – published the Financial Reporting Council (CA and CA firm listing) Rules, 2022 in a gazette on November 10 this year.

The council aims to ensure transparency of the country’s financial reporting system through the rules, introduced under the power of Financial Reporting Act, 2015. FRC also hopes the changes will establish good corporate governance by ensuring accountability of auditors and audit firms.

As per the new rules, CAs or CA firms have to renew their registration annually by submitting an application along with their certificates and relevant documents to the FRC three months prior to the expiry of their registration.

The regulator will follow the fiscal calendar – July to June – in this regard. The registration applications and attached documents will be verified by a three-member FRC committee within 30 days of submission.

What’s the requirement?

A chartered accountant who is the owner or stakeholder at more than one CA firm will not be considered an eligible applicant for FRC certification. An applicant cannot hold a job in any other organisation except a CA firm.

But CAs affiliated with internationally recognised CAs or CA firms can apply for registration or renewal. An applicant seeking FRC certificate must not have involvement in any work or organisations that poses a conflict of interest.

Besides, an applicant cannot stay abroad or absent from audit work for more than six months without taking approval from the FRC. But medical emergencies will be taken into consideration.

Foreign nationals, people with permanent residency abroad, fugitives, defaulters, and those who are bankrupt will not be eligible to apply for FRC listing. In addition, people who are convicted in corruption cases, or accused or convicted in cases of crimes against humanity, war crimes or genocide will not be able to apply either.

After the documents submitted by an applicant are verified, their case must be produced before a meeting of the council with recommendations from the enrollment and renewal committee, and the selection committee within 45 days.

The council will decide on the fate of the applicants. If rejected, the applicant will be notified within 15 days of the meeting.

CAs and CA firms will have to submit the registration application through the FRC-prescribed form-3, and both single and joint venture CA firms have to submit their applications through form-4.

In cases of delay in issuing registration certificates, FRC will issue a temporary certificate to CAs and CA firms. Besides, the applicants can also submit applications online. FRC’s new rules further state that only a registered CA can be the chief executive officer of a CA firm.

CAs and CA firms, who audit financial reports of banks, security exchanges, micro-credit institutions and other financial institutions, have to submit a number of additional documents to get registered with the FRC.

The documents include three years’ experience certificates for CAs from the Institute of Chartered Accountants of Bangladesh. CA firms must also submit TIN, BIN, VIN certificates, enrolment number of ICAB, and mention the size of their offices, IT systems capacity.

What’re the fees?

The new FRC rules mandate that every CA and CA firm need to pay the listing fee by pay order or crossed cheque in favour of the FRC along with the application.

After the enrollment, any CA who is the sole proprietor or a stakeholder of his firm only, will not have to pay annual enrollment or renewal fees again for their partnership or ownership. However, in case of separate registrations, individuals and firms have to pay fees separately.

Besides, CA firms will have to pay separate registration fees for their branches, if any.

The FRC has set the registration fee for a CA to Tk 3,000 – Tk 5,000, while the renewal fee ranges between Tk 1,500 – Tk 2,000. For CA firms, the registration fee ranges between Tk 5,000 – Tk 50,000 while the renewal fee begins from Tk 2,500 to a maximum of Tk 25,000.

The fees for a CA firm will be decided based on the numbers of stakeholders it has. The registration fee for each branch has been set at Tk 5,000 and renewal fee at Tk 2,500. The late fee can range from a minimum of Tk 500 to a maximum of the equivalent listing fee.

Bangladesh introduced the Financial Reporting Act, 2015 on September 6 the same year, keeping a provision for the establishment of the Financial Reporting Council.

The government had made this decision to bring discipline into the country’s financial system, and ensure transparency and accountability in the activities of non-government and autonomous organisations, banks, non-bank financial institutions (NBFIs), and insurance firms.

Ensuring transparency in the financial reports of such organisations will help boost investor confidence, and encourage foreign investors into entering joint partnerships with Bangladesh.

The FRC started out as a regulatory body on July 6 2017. Md Hamid Ullah Bhuiyan is currently serving as the council’s chairman.