Company owners are now concentrating more on making profits and not on good governance while family dominance is one of the biggest constraints on ensuring corporate governance in the country, experts have said.
Referring to the Three Lines of Defence model, they said auditors can deploy their knowledge with professional acumen while performing auditing if the three lines do not work properly, and there will be no gaps, overlaps, or ambiguities in organisations’ risk management and control activities.
They made the observations at a webinar titled “The three lines of defence: Reflections in the context of Bangladesh” organised by the Institute of Chartered Accountants of Bangladesh (ICAB) on Tuesday.
Mohammad Muslim Chowdhury, comptroller and auditor general of Bangladesh and former secretary of the finance ministry, was the chief guest while Financial Institutions Division Secretary Sheikh Mohammad Salim Ullah and Financial Reporting Council Bangladesh Chairman Professor Dr Md Hamid Ullah Bhuiyan were the special guests.
Muslim said the corporate sector needs multiple defence lines to protect public interest.
It is unfortunate that all the allegations are raised against the fourth line of defence – the external auditor for financial mismanagement, he said.
He also said the management should emphasise value creation rather than profitmaking activities.
Regulators should address all segments of good governance in the corporate sector by effectively imposing the three lines of defence, he added.
ICAB President Mahmudul Hasan Khusru delivered the welcome address. He said the Three Lines of Defence model was designed to give the board and senior management clarity on which line is responsible for which areas, how the functions and elements are interrelated, and which risk each function or activity should monitor.
The model provides guidance for audit committees, he said, adding risk management is a very critical and complex job.
There is also the need to have the right people, the right processes, and the tools in place, which are fundamental to success in governance, risk, and compliance, he added.
Dr Javed Siddiqui, professor of accounting and director of Postgraduate Taught Programmes in the Alliance Manchester Business School at the University of Manchester, presented the keynote. He said the Three Lines of Defence model was developed by the Federation of European Risk Management Associations and the European Confederation of Institutes of Internal Auditing in 2008-10.
It has since been adopted as the best practice framework for governance risk and compliance as well as enterprise risk management, he said.
He also said the model provides regulators a degree of consistency across the organisations they oversee regarding risk accountability and roles.
Highlighting the corporate features of the country, he said it is true that most of the corporates in Bangladesh are dominated by family entrepreneurship, which leads to less respect for governance within the organisations.`
Even the owners sometimes do not know the importance of the role and value of internal auditors, he added.
Dewan Nurul Islam, former ICAB president and managing director of Grant Thornton Consulting Bangladesh, moderated the session.
ICAB Chief Executive Officer Shubhashish Bose and Masud Khan, chairman of Unilever Consumer Care, also spoke at the event.
