Icab, NBR developing system to authenticate financial statements

The Institute of Chartered Accountants of Bangladesh (Icab) and the National Board of Revenue (NBR) jointly are in progress of developing a document verification system (DVS) to authenticate audited financial statements.

This would help the authorities find out unscrupulous business organisations who use doctored reports to evade corporate tax.

In recent times, Icab has also noticed that financial documents endorsed by third parties misrepresenting themselves as chartered accountants are misleading different regulating authorities and stakeholders.

To curb such malpractices, the Icab and the NBR are in progress of developing the document verification system.

Icab President Muhammad Farooq FCA made introductory remarks at the programme on DVS at the NBR conference room on Tuesday where NBR Chairman Abu Hena Md Rahmatul Muneem, its members, Icab vice-presidents Sabbir Ahmed FCA and Muhammed Forkan Uddin FCA, and council members were present.

Abu Hena Md Rahmatul Muneem said the DVS will definitely help NBR officials authenticate audited financial statements. "However, if possible, more financial information may be included in the system so that we can verify documents in greater detail."

"Develop the system as a financial database which would be a national asset to be used by different regulators," he added.

The NBR chairman advised that the Icab should consider the legal challenges in implementing DVS. The Icab and the NBR will further work jointly to make the DVS more effective for users.

Muhammad Farooq FCA said that the Icab has developed the DVS ensuring data security and confidentiality of clients.

"It will be made mandatory for all practicing chartered accountants to register with the DVS portal and generate document verification certificate. Otherwise, audit reports and financial statements signed by them would not be accepted by regulators and other stakeholders."  

Replying to a question, the Icab president said a provision has to be made so that non-compliance with DVS will be penalised by the institute.

Icab Vice President Muhammed Forkan Uddin FCA explained the importance of DVS to curb the malpractice.  

He said the DVS is the upgradation of the existing Digital Identification of Audit Reports (DIAR) system. The NBR and the Icab will jointly work on the system with a view to removing the anomalies in the financial sector of the country.

From the commitment to build a better Bangladesh, the Icab initiated the DVS which would help the revenue authority and other regulators to authenticate financial statements, he added.  

The Document Verification Code (DVC) is a system-generated alphanumeric unique ID for audit reports and the financial statements endorsed by practicing chartered accountants.

It can be viewed by the government agencies, and different stakeholders and regulators, such as the Bangladesh Bank, the Financial Reporting Council, the Bangladesh Securities and Exchange Commission, and the Insurance Development and Regulatory Authority, covered under memoranda of understanding or any framework with the institute.

Additionally, people who want to verify the audit reports through this application would also have access to it to find some essential financial information.

The DVC will be generated by the practicing chartered accountants at the time of signing a document on financial information of organisations.

All documents will carry a unique code generated by the system. 

During generating the DVC, some mandatory financial figures of the company must be entered, such as turnover, net worth, profit or loss etc.

The DVC can be verified through the search option on the DVS portal by sharing a few pieces of information, such as the name of the person, organisation, purpose of verification of information, unique code of documents, mobile number and email address. 

Then a one-time password (OTP) will be generated and sent to the registered mobile number of the searching person, and it will have to be submitted for getting details of auditors, financial information, and the list of persons or regulators or organisations who verified the information through the DVS.

In the existing DIAR system of the Icab, only auditing CA firms are identifiable for a particular audit assignment if the CA firm concerned declares the client name in annual return submitted to the institute.

But it does not warrant the authenticity of submitted documents as well as uniformity of information submitted to different regulators or stakeholders.

To redress the situation, the Icab introduced the DIAR system in 2017 and the NBR issued a statutory regulatory order (SRO), advising tax officials to verify duly signed audit reports through the system available on the Icab website.