The Development of

Accounting Profession in
Bangladesh

Auditing
(FAC-603)
Term Paper On: The Development of Accounting Profession In Bangladesh

Prepared For
Md. Hossen Miazee
Lecturer, School of Business, MBA (UITS)

Prepared By

Sujan Bhowmik

ID: 16102538

Sharmin Sultana

ID: 142030210024

Toma Ghosh

ID: 151030210014

Md. Mahbubur Rahman

ID: 15302503

Md. Zakaria

ID: 15202538

Date of Submission: 4th August, 2016

Date 4th August, 2016

To
Md. Hossen Miazee
Lecturer, School of Business, MBA (UITS)

Subject: Request to accept the term paper

Dear Sir,

It is a great pleasure for us to submit our term paper on Auditing (FAC-603). We have
prepared this paper as partial fulfillment of the course.
We are, ready to make you clear regarding any confusion or further clarification from this report.

Sincerely yours,

_____________
3

Sujan Bhowmik
ID: 16102538
MBA, Summer 2016

Executive Summary
In Bangladesh, the profession of accountancy developed during the British colonial period.
Today, it is represented by two professional bodies, the Institute of Cost & Management
Accountants of Bangladesh (ICMAB) and the Institute of Chartered Accountants of
Bangladesh (ICAB).Chartered Accountants complete their training in practicing firms and
specialize in financial accounting, financial audit and tax. CMAs receive particular training in
cost audit, management audit and management accounting, as well as general accounting and
taxation. Both the ICMAB and ICAB are under the administrative control of the Ministry of
Commerce. The Government of Bangladesh considers both type of professional accountants
equal in respect of employment in government services per circular No.Com/PTMA/AP/2/19/87.
The Generally Accepted Accounting Principles (GAAP) in Bangladesh are based upon standards
set by the ICAB, which has stated its intention to adopt International Financial Reporting
Standards. As of 2013, ICAB has adopted the IFRS as issued by the IASB, except for IAS 39.
and All foreign companies, and domestic companies listed on the Dhaka Stock Exchange (DSE)
and/or the Chittagong Stock Exchange (CSE) are required to use IFRS.

Origin of The Report

Md. Hossen Miazee, Faculty, MBA, University of Information Technology & Sciences (UITS),
the honorable course instructors of Auditing, assigned us to prepare a report on 4 th August,
2016 about the The Development of Accounting Profession in Bangladesh.

Objective of the Study

In Bangladesh, The Accountancy profession is now accepted as one of the most prestigious
profession. After industrialization it was accepted as a profession in worldwide. There are a
number of different national and international institutes of accountants to control and develop the
profession. At present world the accountancy profession indicates two types of certified
accountants- one is Chartered Accountants and another one is Cost & Management
Accountants. To address the followings components in this paper:
To know about the accounting as profession in Bangladesh.
To know about the accounting.
To know future of accounting profession in Bangladesh.
To know the current status of accounting profession in Bangladesh.
To find out the limitations of accounting profession in Bangladesh.

Scope of Study
This paper gives us the opportunity build up an overall understanding on the a c c o u n t i n g
p r o f e s s i o n sector as well as how can it be develop in Bangladesh. However this paper holds
study about
1. Accounting profession in Bangladesh as well as the whole accounting practices through
some related sectors.

2. Make some conclusion and recommendation for Square Pharmaceuticals limited based on
the ratio analysis.

Limitation of the study

a)

Based on only secondary source of data

b)

Time bound restrict me for further research on the topic

c)

There is not possible to analyze every realm of accounting profession in Bangladesh.

Methodology
To prepare this report we have collected data from different published materials. Then we have
conducted a secondary study. We also collect data from internet .This way we collected primary
data. Thus we have used both primary and secondary report to prepare this report.

Introduction
From very ancient period people living their life by doing various professions. Among those
some are eternal and some are prestigious. The Accountancy profession is now accepted as one
of the most prestigious profession. After industrialization it was accepted as a profession in
worldwide. There are a number of different national and international institutes of accountants
to control and develop the profession. At present world the accountancy profession indicates
two types of certified accountants- one is Chartered Accountants and another one is Cost &
Management Accountants. In Bangladesh there are two different institutes for the accountantsThe Institute of Chartered Accountants of Bangladesh (ICAB) and The Institute of Cost &
Management Accountants of Bangladesh (ICMAB). It is been compulsory to audit the
accounts for different codified companies in Bangladesh and only the Chartered Accountants
can perform this task. In the Section 220 of Companies Act 1994, it is been compulsory to
audit the manufacturing costs for a number of specific organizations and the accountants passed
from the ICMAB can perform this task.

Definition of Profession

Profession is calling in which one professes to have acquired specialized knowledge which is
used either in instructing guiding or advising others. The tasks performed by doctors, engineers,
accountants, teachers, lawyers etc. are examples of profession. The characteristics of profession
are1.
2.
3.
4.

It is used to give advice.

It is used to provide training.
There must have an institute for the professionals.
There must have some rules and regulations.

Accounting as a Profession
Auditing & Chartered AccountancyThe term Auditing comes from the word Audire. In 1854 accounting profession achieves
royal acceptance by establishing worlds first Chartered Accountants Institute in England. It
was developed so quickly as a profession in British Empire after founding London Institute of
Accounts in 1880. Although accounting profession starts from Britain, later it was developed by
the Americans. In 1882, Institute of Accounts was established in New-York city and in 1887,
American Association of Public Accountants (AAPA) was founded. In late 1957, it was
changed to American Institute of Certified Public Accounts. In Bangladesh, according to
Company Law 1994 only the Chartered Accountants can audit the accounts for organizations.
Audit for manufacturing costs & CMA ProfessionIt was not accepted as a profession before 1919. Cost and Management Accountants profession
achieves organizational foundations after establishing The Institute of Cost and Management
Accountants in Britain at 1919. In the same year, there established Institute of Management
Accountants in America to bringing up and develop this profession. To provide practical lesson
and training, there also established another institute under IMA named Certified
Management Accounting. According to Company Law 1994 in Bangladesh, a number of cost
and management accountants who have passed and got license from ICMAB can audit the
accounts and manufacturing costs for some specialized organizations. From given power into the
Section 226(4) of Companies Act, to fulfill the purpose of the law Bangladesh government
passed some rules for cost audit report in 1997. And by passing those rules, cost auditing gets its
base in Bangladesh.

History of Accounting Profession in Bangladesh

7

The history of accounting profession in Bangladesh can be describe under two sectionA. Pre-Independence History
B. Post-Independence History
Pre-Independence History1. 1850-1914: The accounting profession was legally accepted in Indian
Subcontinent by bringing company law into force in 1850. According to the law,
it was been compulsory to audit the accounts of the organizations on half-yearly
basis. And to do so there needs expert auditor. In that period, the companies select
European and Indian auditors to maintain the interest of the European and Indian
shareholders. As there were no rules to assess the eligibility of Indian auditors, the
lawyers act as an auditor in that period.
2. 1914-1947: It was made compulsory to audit the accounts of a company by an
expert and independent auditor in the Company Act 1913 which was effective
from 1st March, 1914. From the due date, any person who was not certified by
government cant perform the tasks of an auditor and for that reason, the lawyers
and other auditors loss their eligibility. In 1918, Mumbai Govt. starts a test of
Government Diploma in Accountancy to bring out professional accountants.
This test was then accepted by other provincial and central government. There
was no central control upon accounting profession until the Auditors Certificate
Rule passed in 1932. Persons who get certificate in pursuance of this law were
known as Registered Accountants (R.A.).
3. 1947-1972: After separation of Indian sub-continent, the Government of Pakistan
accepted the Companies Act 1913 and the Auditors Certificate Rule of 1932.
In 1950, the Government of Pakistan made some corrections on Auditors
Certificate Rule and changed it to Auditors Certificate Rule, 1950. According
to this law, the Ministry of Commerce preserves a list for accountants and the
persons who were in that list got the authority to use Registered Accountants.
Later the registered accountants established Pakistan Institute of Accountant to
preserve their interest and for development of the profession. This institute tried to
make it understand to the government that there need to establish a separate
association to authorize and control the accounting profession. After that the
government realizes the importance of the profession and set up Council of
Accountancy- an advisory board. Later on 1 st of July 1961 the government
declared an ordinance- Institute of Chartered Accountant of Pakistan in
accordance with the recommendation of the advisory board. And then on 1 st July
1961 Institute of Chartered Accountant of Pakistan was established as an
autonomous association. This association controls all about the accountancy
profession.

A. Post-Independence HistoryAfter liberation war in 1971, Bangladesh which was formerly known as East
Pakistan was separated from Pakistan and appeared as an independent country.
After independence, Bangladesh faces lots of problems and difficulties because of
a little number of Bengali accountants. For that reason, the government of
Bangladesh set up an Add-hock committee which appoints 18 chartered
accountants to solve the problems. On 6th January 1972, the government passed a
law The Bangladesh Chartered Accountant Order and then established Institute
of Chartered Accountants of Bangladesh as of the following order. And now this
association controls the accountancy profession in Bangladesh. There has another
autonomous association ICMAB which is also working for the development of
this profession. This institute is related with the cost and management
accountancy profession. Incidentally, The Parliament of Bangladesh made some
additions and alterations of the Companies Act 1913 and passed the
Companies Act 1994.

Development of Accounting Profession In Bangladesh

Role of Accounting Profession in the Economic Development of

Bangladesh
The economic and commercial development is closely related each other. Accountancy
profession has its importance to record the business transactions and to verify its accuracy. This
profession is also take part into the fastest economic development of Bangladesh by
accomplishing the following tasks1. Proper maintenance of financial institution- Bank, Insurance Company and other
financial institutions are supplying capital to carry on their business, for which economic
position is developing. The financial tasks of banks and insurance companies are
influenced by accounting information and so that it is necessary to keep record of the
accounts of these financial institutions.
2. Preparing budget- It is necessary to prepare a budget into the business organizations for
economic development. On the basis of past experience an organization prepares cash
budget, manufacturing overhead budget, sales budget, master budget etc. to ascertain the
development. And there need accounting information to prepare a budget.
3. Reducing corruption by auditing accounts- It is possible to reveal the frauds and
forgery of a company by accounting profession and for that it is been possible to reduce
the corruption and make sure the proper use of the funds of the company.
9

4. Determination of national income- There has special contribution of accountancy

profession to determine national and international income of financial activities and
preparing the balance sheet.
5. Statistical work- In accordance of government rules and regulations, accounting
profession helps into statistical works by providing necessary information that is
collected and recorded from the business transactions of different parties.
6. Employment- This profession helps in the economic development by employment of lots
of people.
In the economic development of a country there needs different information. The accountancy
profession helps to successful operation of a business by providing this information. And in this
way accounting helps to the economic development by the development of businesses and
employment.
Activities undertaken or performed by Professional Accountants of
Bangladesh
Activities that are performed by the professional accountants in Bangladesh are as follows Audit Accounts- Maximum professional accountants in our country is engaged with
auditing accounts. One or more accountants establish a firm for this purpose and conduct
the audit under the firm. Their task is to justify the accuracy of the accounts of different
firms and give their opinion from the view point of laws.
Keeping Accounts- Professional accountants are appointed in the accounting department
of different business & social organizations; government, non-government and
autonomous organizations; and they records & prepares the accounts.
Tax Advice- Many professional and certified accountants works as tax advisor and plead
for their clients about tax related case. Their work includes- preparing tax description,
identifying tax liabilities and providing tax related advices.
Formation of Company- When establishing a company there appointed professional
accountants for preparing all necessary documents. In this case, they prepare the
memorandum and articles of association, statements or reports and other legal
documents.
As a liquidator- Professional accountants can be appointed as a liquidator in the period
of liquidation of a company.
Investigation- Professional accountants are appointed to accomplish the investigation
where they inquire the final accounts of a business or company.
Implementation of Management Accounts- Sometimes professional accountants are
appointed to help the management. Here they prepare financial plans and budgets,
financial report and manufacturing expenses report, compare and analyze the actual
results with standards.
Problems of Accounting Profession
10

The problems of accounting profession in Bangladesh can be describe under two section-

A.

A. Problems relating to students &

B. Problems relating to profession
Problems relating to studentsLanguage- Chartered Accountancy is internationally accepted as a profession. Maximum
number of student, even the students of Masters Level studied in Bangla medium. But
they have to study in English medium after joining the accounting profession. As a result,
the students who have passed from Bangla medium faces problems while studying this
course. ICAB and ICMAB started foundation courses for the interested students of C.A.
and CMA to solve their problems.
Below Standard- Even only graduate students can take admission in C.A course as
articled student, generally intelligent students didnt have eagerness to come to this
profession. Most of the people think that the standard of this education is below from
previous time for which students faces difficulties to follow the specific curriculum.
Lack of professional teachers- Students faces problems because of the lack of
experienced and trained teachers and on the other hand, the professional accountants
were very much busy.
Opportunity to Learning- The students under C.A. firms are engaged with the firms
tasks for long time for which they cant get enough time for study. In addition to this,
training facilities are not sufficient and the trainee students didnt get sufficient
allowances on regular basis.

B. Problems relating to profession Remuneration- The fees for audit of accounts is not so attractive if we consider the ruin
of currency. The audit fee is short amount in Bangladesh then other South-Asian
countries.
Importance- The accounting profession doesnt treat cordially like as other professions.
Moreover, the accountants who trained from foreign country get importance then who
trained in the country.
Absence of proper social environment- The social environment of Bangladesh is not
satisfactory for the professional accountants to perform their tasks independently. It cant
be possible to work independently and impartially because of getting pressure from
different groups.
Opportunity of employment- Chartered accountants are not being employed for desired
post into the government and autonomous organizations. The slow movement of
industrial development is an obstacle to the development of accounting profession.
Competition- The dignity and development of accounting profession is badly affected
because of increased C.A firms and competition among them.
Financial problem- The accounting profession in Bangladesh is not getting enough
financial support from the government which is a great problem for the development of
the profession.
11

Formation, Management and Functions of the Institute of Chartered

Accountants of Bangladesh (ICAB)
Formation: The Institute of Chartered Accountants of Bangladesh is established as an
autonomous association in accordance with the Bangladesh Chartered Accountants Order,
1973 to control and develop the accounting profession. The association has long standing
existence and operated with its own seal which is the symbol of its existence. The association can
occupy, buy and sell movables and immovable properties.
Membership: Peoples who were registered before the declaration of Chartered Accountant
Order on 1973 and those who were registered later by following the order will be treated as the
member of the association until their name were registered. Persons who can be the member of
this association are1. Any citizen of Bangladesh who were engaged with accounting profession when the
order was effective.
2. Person who have passed the authorized tests and completed authorized training.
3. Person who have passed from any foreign Institute of Accountancy and
accomplished the training accurately. But condition is that, he should be accepted by
the ICA council of Bangladesh and the test and training should also be accepted by
the institute. The council can apply more conditions if the person is not a citizen of
Bangladesh.
4. (a) Any Bangladeshi citizen who passed the tests and accomplished the training from
any foreign Institute of Accountancy and achieves the membership of that institute
before the Bangladesh Chartered Accountants Order, 1973 takes into action.
(b) Any Bangladeshi citizen who was studying to take part in the examination of any
foreign Institute of Accountancy before the declaration of the order and at the same
time, s/he was on training either in native country or abroad; or s/he was on training
after passed from any foreign Institute of Accountancy before declaration of
Bangladesh Chartered Accountancy Order, 1973.
5. Any Bangladeshi citizen who passed the exam before 25 th of March, 1975 under
Auditor Rules, 1950 and Chartered Accountants Rules, 1961.
Types of Membership: There are two types of member of the association- Associate and
Fellow. A member is called an associate if he is listed in the register of the association and can
use A.C.A after his name. And if an associate engaged with accounting profession for 5 years,
then he can be listed as a fellow member after applying and made payment of the fee and should
be approved by the council. After that he can use F.C.A with his name.
Disqualified for Registration: Following people will not be the member of the association, if1. S/he is under 21 years of age in the period of application.
12

2. S/he is mentally disordered.

3. S/he is an insolvent.
4. His membership is forbidden by the institute because of professional or any other
misbehavior.
If the membership of any one is forbidden for a specific period, than he can be registered
again after end of the period.
Management: The management system of Institute of Chartered Accountants of Bangladesh is
as follows1. There have 20 members in the management. Among them 17 members are elected
from professional accountants and other 3 are selected by the government as
representative of Ministry of Finance, Commerce and Industries.
2. The life time of the management council is 3 years.
3. There should be elected a chairman, one or more vice-chairman among the members
of the council. The chairman will be act as the chief host of the council.
4. There will be a treasury to operate the activities of the association.

Functions of ICAB: The functions of the association are1. The code of conduct for the accountants should be prepared on the basis of
Chartered Accountants Order, 1973.
2. Takes necessary action if any member doesnt maintain their code of conduct.
3. Keep a list of professional accountants.
4. Set up a standard for foreign certified accountants to work as a professional in
Bangladesh.
5. Arrangement of professional examination.
6. Set up sub-committees if needed, to solve the problems related to the profession.
Institute of Cost and Management Accountants of Bangladesh
(ICMAB)
In 1966, Pakistan Institute of Industrial Accountants Act was passed to control the activities of
cost and management accountants. Then Bangladesh Institute of Industrial Accountants was
established after independence of Bangladesh. This institute keeps contribution into the financial
management of Banks, Insurance Companies and other organizations. Later in 1977, government
of Bangladesh declared Cost and Management Accountants Ordinance to control the
manufacturing costs and the profession of management accountants. Institute of Cost and
Management Accountants of Bangladesh was then established in accordance with the
ordinance.

13

Management and Functions of ICMAB: People who were registered before this ordinance or
who were registered later by following the rules and regulations of the ordinance, they will be
considered as member of the Institute of Cost and Management Accountants of Bangladesh
until their name exist in the register. [Section 3(1)]
The Association will have permanent right of succession and a general seal. It can also
occupy, buy and sell movables and immovables properties.
Membership: Persons who can be the member of this association are1. The Associate or Fellow member of any institute which became extinct.
2. Persons who have passed the exam and completed training that arranged by the
council.
3. Persons who have passed the exam and completed training from any foreign Institute
of Cost and Management Accountant and became the member of that institute. In
this case, they should be accepted by I.C.M.A.B and the exam & training should also
be accepted by the institute. The council can apply conditions if they are not the
citizen of Bangladesh.
4. Any Bangladeshi citizen who passed the tests and accomplished the training from any
foreign Institute and achieves the membership of that institute before declaration of
Cost and Management Accountants Ordinance.
5. Any Bangladeshi citizen who was studying to take part in the examination of any
foreign Institute of Cost and Management Accountant before the declaration of the
order and at the same time, s/he was on training either in Bangladesh or abroad; And
passed the exam and completed training.
Types of Members: There are two types of member of the association- Associate and
Fellow. A member is called an associate if he is listed in the register of the association and can
use A.C.M.A after his name. And if a member engaged as an associate for 5 years, then he can
be listed as a fellow member after applying and made payment of the fee and should be approved
by the council [Section 6(4)]. After that he can use F.C.M.A with his name. People who were
the fellow member of an abolished institute before declaration of the ordinance can use F.C.M.A
after their name until they are registered.
Disqualified for Registration: Following people will not be the member of the association, if1.
2.
3.
4.
5.

S/he is under 21 years of age in the period of application.

S/he is mentally disordered.
S/he is an insolvent.
S/he is convicted by the court because of lewdness.
His membership is forbidden by the institute because of professional or any other
misbehavior. If the membership of any one is forbidden for a specific period, than he
can be registered again after end of the period.

14

Management: There will have a council to manage and accomplish the activities of the institute
[Section 9(9)]. Council will be formed with the combination of following persons1. Members of the institute will elect 12 persons from the fellow members.
2. 4 persons will be selected by the government [Section 9(2)]. Here nobody from the
institute will be nominated as a member of the council.
3. Members of the council will select chairman, two vice-chairman, secretary and
treasurer.
Functions of Council: The functions is as follows1. The Council can apply necessary power to achieve the objectives of the ordinance
and to accomplish the functions.
2. Organize the examination for those who are seeking membership of the institute.
3. Student registration and organize training.
4. Set up standards for achievement of membership.
5. Acceptance of foreign competence and training to provide membership.
6. Provide or cancel certificates for training.
7. Keep records of registered members and publish the list of the members and
practitioners.
8. Set up and receive fees from examinee, students and members.
9. Retract names from register and re-register the names.
10. Maintain honor and dignity of professional competence of the members of the
institute.
11. Conduct research work on cost and management accounting by providing financial
support or any other way to the members of council.
12. Provides professional service in case of cost and management accounting.
13. Manage the library and publish books and journals on cost and management
accounting.
14. Apply rules and regulations upon members, officers and employees of the institute.
Council will set up the following standing committees to successfully accomplish the
functions- Executive committee
- Education committee
- Examination committee
- Research & Development committee
- System development committee
Cost and Management accountants regulation was prepared in accordance with the order
in 1980. The rules and regulations to operate the institute and code of conducts for
members are included in the order.
Role of ICAB & ICMAB in development of Accounting Profession in
Bangladesh
15

Roles of ICAB is as follows1. The code of conduct for the accountants should be prepared on the basis of
Chartered Accountants Order, 1973.
2. Takes necessary action if any member doesnt maintain their code of conduct.
3. Keep a list of professional accountants.
4. Set up a standard for foreign certified accountants to work as a professional in
Bangladesh.
5. Arrangement of professional examination.
6. Set up sub-committees if needed, to solve the problems related to the profession.
7. Maintenance of international standards.
8. Help government to prepare rules and regulations for accounting profession.
Roles of ICMAB is as follows1. Organize the examination for those who are seeking membership of the institute.
2. Student registration and organize training.
3. Set up standards for achievement of membership.
4. Acceptance of foreign competence and training to provide membership.
5. Maintain honor and dignity of professional competence of the members of the
institute.
6. Conduct research work on cost and management accounting by providing financial
support or any other way to the members of council.
7. Provides professional service in case of cost and management accounting.
8. Manage the library and publish books and journals on cost and management
accounting.
9. Apply rules and regulations upon members, officers and employees of the institute.

Future of Accounting as profession in Bangladesh

As there are lots of problem of accounting profession, it has also a bright future. The accountants
of Bangladesh have good reputation in Africa, Middle-East and South Asian countries. The
demand for certified accountants from Bangladesh is increasing day-by-day in abroad and there
have also chance of getting employed. There need to develop the standard of students to get the
chance. In Bangladesh, accounting profession is limited into auditing the accounts of corporate
sector. This is because of slow economic development and improper use of the skills of certified
accountants. In recent years many industries were established and the government is trying to
establish more for quick industrial development. Many N.G.Os and non-trading organizations are
working in Bangladesh and there need to prepare financial rules, keep records and audit of
accounts and control the expenditures. Certified and professional accountants can keep their
contribution to prepare national economic plan. The precaution of economic development is to
make sure the accountability of every sector and so that the development of accounting

16

profession is important. Government and Accounting institutes can contribute for the
development and expansion of this profession.

Traditional book-keeping system of Bangladesh

The book-keeping system of Bangladesh can be divided into three parts-

A. Sole proprietorship & Partnership firms

B. Accounting system of companies
C. State & Statutory accounting system
Sole proprietorship & Partnership firms- The book-keeping system of sole
proprietorship and partnership firms is described below:
Objects- The main objective of book-keeping in sole proprietorship & partnership firm is
to provide actual information to owners, so as they can make decisions for the company.
In this system, interest of any other parties is not considered rather than the owners.
Book-keeping in single entry system- where the rules of double entry system are not
followed, that is known as single entry book-keeping. In this system, to calculate profit
and loss amount, at first need to calculate capital amount by deducting liabilities from
assets. In that case, we calculate opening capital by deducting opening liabilities from
opening assets and calculate ending capital by deducting ending liabilities from ending
assets. When following single entry system, profit and loss amount is calculated in the
way of adding the ending capital, raised interest, other undistributed incomes and
deducting the opening capital, extra capital, interest on capital, unadjusted expenses. At
the end of the year a statement of assets and liabilities is prepared and there have
possibilities of mistakes and frauds as it not follows double entry system.
Uses of accounting policy and standard- Accounts of a firm dont get completeness
without having accounting policy and standards. But sole proprietorship and partnership
firm dont follow the standards and policies for which it is not accepted by others but
accepted by the owners.
Audit- Audit of account animates an organization. There have possibilities of mistakes
and frauds in the account if auditing is not done. Audit of account for sole proprietorship
and partnership firm depends on the willingness of the owners, and here it is not
compulsory to audit the account.

Accounting system of companies Unlimited Liabilities Companies- Here liabilities of shareholders are unlimited. The
employees of unlimited liabilities companies are personally liable for their activities.

17

 Limited Liabilities Companies- Here liabilities of shareholders are limited and they bear
liabilities of a certain amount. Public limited company is known as registered company
because it has to register in the stock exchange. And shares of Private limited company
are not under the control of share market.
The book-keeping system of companies is described below Legal obligations: According to the Section 2 (1) (d) of Company Act, 1994- Company
means any company established and registered or any company existed with following
this Act. These companies record the account by following double entry system. So there
have chance to audit the account and it can be accepted to all parties of business.
Double entry system of book-keeping: In this system all financial transactions are
recorded into two side- debit and credit side of the account. As following the rules of
double entry system, accounting is done into different steps such as- Journal, Ledger, and
Trial Balance and then the final step is preparing the financial statement by making
necessary adjustments with the trial balance.
To follow accounting policy and standard: Any account cant be completed if it not
follows accounting policy and standards. In case of Companies, policy and standard is
judged accurately, because all parties of business are deliberated here.
Audit: Audit of account is compulsory for Public limited company as it brings accuracy
into the accounting system of a company.
Cost Accounting: Manufacturing companies prepares their account by following the cost
accounting system.
State and Statutory accounting system
This type of company is establish in accordance with the special order of the President or
National Council of Law and Justice.
Use of accounting policy and standard- These organizations keep records of account and prepare
financial statements by following double-entry book-keeping system. In double-entry system,
accounting policy and standard is maintained.
Audit- Audit is compulsory for these organizations, because if there have no rule of audit than
the possibility of mistakes and fraud is exists.
To develop the accounting system of Bangladesh, every organization should follow the doubleentry system and also should follow the International Accounting Standards issued by FASB.

Limitations of Current Accounting Practice of Bangladesh

18

Accounting system in Bangladesh is divided into following two sections on the basis of the
nature of organizationsA. Accounting system for unregistered firms
B. Accounting system for registered firms
Limitations of unregistered firms
Legal base- There has no any legal base to record account for unregistered firms in
Bangladesh. This task is done on the willingness of the manager or owner.
Limited goals- Account is recorded to calculate profit and loss and financial condition of
the firm and maintained in such a way so that the owner can know the actual financial
condition.
Applying single entry system- Maximum unregistered firm of Bangladesh keep record of
accounts by applying single entry system. In this system there is a possibility of mistakes
and frauds. Here total and net profit cannot be calculated accurately.
To follow accounting policy and procedure- Accounting policy and procedures are not
follows accurately in the unregistered firm. Accounting procedure cannot be applied
accurately because of following single entry system.
Lack of experienced accountants- Account is recorded by inexperienced accountants for
whom it is not possible to justify the accuracy of the account.
Absence of audit- Audit of account is not performed in these organizations. As a result,
the report is not published by justifying accuracy.
Lack of technology- As these organizations are small in size, there have no used the
technology.
Accounting system for registered firms
Limitations of registered firms are as follows Lack of proper use of accounting policy and procedure- Among registered firms, Private
limited companies dont apply the accounting policy and procedures accurately. As a
result, number of problem faced while preparing financial statements.
Complexity in inter firm comparison- Registered firms follows different accounting
policy to prepare financial statement for which there have complexity in inter firm
comparison.
Weakness of legal base- Nationalized industries is controlled under Bangladesh
Industrial Acts, 1972. In this Act, there have rules for preparing account but have no any
rules for preparing financial statement. As a result financial statement are failed to fulfill
the need of users.

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 Qualitative value of accounting data- many organizations didnt follow the international
standards while recording accounting information. For this reason user of accounting data
faces many problems.
Weak accounting system- There has lack of experienced employees in the accounts
section of many registered firms for which accounting system cannot be maintained
properly. So it is necessary to appoint available experienced people for performing
accounting activities.
Lack of comparative information- According to the Section 185 of Companies Act,
1994, it is compulsory to show the accounting information of previous year while
presenting data of current year.

Recommendation
Ways to overcome the limitations
The limitations of current accounting practice can be overcome by following a number of waysUnregistered firm
Applying of double entry system- Unregistered firms should also follow the double
entry system of book-keeping. If they do so, they will be able to prepare and maintain the
account accurately.
To follow accounting policy and procedure- Accounting policy and procedures should
be followed by unregistered firms and the authority should be aware of that.
Appoint of efficient accountant- It is necessary to appoint experienced and efficient
accountant to accurately maintain the transaction of an organization.
Impose auditing system- It is possible to make corrections of accounts in the way of
imposing audit system. Auditing helps to justify the accuracy of account.
Registered firm
Proper use of accounting policy and procedure- Registered firms should also follow
accounting rules and procedures while preparing financial statements. Only then it will be
possible to maintain accuracy of account.
Inter-firm comparison- Financial statements should be prepared in such a way that it
can help to make inter-firm comparison.
Proper uses of law and create new law- It should ascertain to proper use of laws which
are for registered companies and create new law if necessary.

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 Prepare financial report in time- The financial report must be prepare at the end of a
period and should be submitted in the Annual General Meeting (AGM).
Developed in accounting system- Accounting system of maximum registered firm is in
very bad position. It is possible to develop this situation by appointment of experienced
accountants.
Professional Misconduct
A chartered accountant performs his tasks by following the rules of Chartered Accountants Act,
1973. In accordance with the act- It is expected that, he will not do any behavior for which the
profession is dignified. The code of conducts for the chartered accountants is specified into the
Chartered Accountants Act, 1973. If anyone break the rules he will be liable for professional
misconduct. When a member is prosecuted because of professional misconduct than the institute
can investigate the complaint in accordance with the Chartered Accountants Act.

Conclusion
As there are lots of problem of accounting profession, it has also a bright future. The accountants
of Bangladesh have good reputation in Africa, Middle-East and South Asian countries. The
demand for certified accountants from Bangladesh is increasing day-by-day in abroad and there
have also chance of getting employed. There need to develop the standard of students to get the
chance. In Bangladesh, accounting profession is limited into auditing the accounts of corporate
sector. This is because of slow economic development and improper use of the skills of certified
accountants.
History says accounting is older than finance, economics and marketing. In our country
accounting is still very demandable subject. To work with this subject we have big scope to get a
job. Not only in Bangladesh, as is shown you the demand for accountant in Asia Pacific Region,
it could be a good advantage for us to develop our profession in accounting sector.

References
1. https://en.wikipedia.org/wiki/Accounting_in_Bangladesh
2. http://acctprofessionbd.blogspot.com/2010/07/aat-in-bangladesh.html
3. http://www.icab.org.bd/index.php?option=com_content&view=article&id=51&Itemid=5
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4. http://newstoday.com.bd/index.php?option=details&news_id=2400740&date=2015-0122
5. http://www.theguardianbd.com/the-institute-of-chartered-accountants-of-bangladesh-abrief-outline/

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