Regulatory body BSEC has summoned six auditing companies due to inconsistencies in their financial documentation
BSEC Summons Six Audit Firms Over Financial Irregularities
In a significant move, the Bangladesh Securities and Exchange Commission (BSEC) has summoned six audit firms and their auditors in response to their failure to report serious financial irregularities and legal violations in the financial statements of four listed companies. The decision was announced in a press release issued on Tuesday.
The audit firms summoned are A Hoque & Co, Ahmad & Akhtar Chartered Accountants, Mahfel Huq & Co, Ata Khan & Co, Shiraz Khan Basak & Co, and Islam Quazi Shafique & Co. The specific financial misconduct details are not provided in the press release, but it is known that Islam Quazi Shafique & Co audited the accounts of Aman Cotton and Fibres for the year ending 30 June 2020, and failed to disclose financial misconduct in their report.
Aman Cotton and Fibres and Far East Islami Life Insurance Company are among the four listed companies involved in the irregularities. Ring Shine Textile's accounts for FY17, FY18, FY19, and FY20 were audited by Ahmad & Akhtar Chartered Accountants, Mahfel Huq & Co, Ata Khan & Co, and Shiraz Khan Basak & Co, respectively, and the irregularities were not reported in the auditors' opinions. Mahfel Huq & Co also audited the financial statements of Far East Islami Life Insurance Company for 2018 and 2019, and failed to disclose financial misconduct in their report.
The press release did not mention the names of the other two listed companies involved, nor did it provide details about the financial irregularities and legal violations in question. It also did not specify which six audit firms were summoned, the hearing date, or when the hearing will take place.
The BSEC has decided to hold a hearing to ask the firms why they should not be banned from auditing. If found guilty, the potential ban could last for a period of five years. The institution currently responsible for holding the audit firms accountable for a possible five-year activity ban in Bangladesh is the Institute of Chartered Accountants of Bangladesh (ICAB).
The BSEC did not specify any consequences for the auditors involved in the irregularities beyond the potential ban from auditing. It is unclear what actions, if any, will be taken against the companies involved in the financial misconduct.
This development comes as a blow to the audit industry in Bangladesh, and raises questions about the integrity of the auditing process for listed companies. It is hoped that the hearing will provide clarity on the matter and ensure that similar incidents do not occur in the future.
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