BSEC bans audit firms, partners over flawed financial reporting
The action follows regulatory investigations that found significant lapses in audit procedures, including inadequate documentation and failure to obtain sufficient audit evidence.
The Bangladesh Securities and Exchange Commission (BSEC) has imposed bans on two audit firms and several partners over irregularities in the financial statements of Fareast Islami Life Insurance and Ring Shine Textiles, in a move aimed at strengthening accountability in the capital market.
The action follows regulatory investigations that found significant lapses in audit procedures, including inadequate documentation and failure to obtain sufficient audit evidence. These shortcomings raised serious concerns about the reliability of the published financial statements.
Mahfel Huq and Co, Chartered Accountants, along with its former partner Abu Kaiser, was penalised for its audit of Fareast Islami Life Insurance's 2018 financial statements.
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A special audit finding from the Institute of Chartered Accountants of Bangladesh revealed that the firm issued an unmodified audit opinion despite major discrepancies in areas such as land development, fixed deposits, and related-party transactions.
The firm has been barred from auditing listed securities for one year while Abu Kaiser faces a two-year ban. The regulator also took action over Ring Shine Textiles' financial statements. For the 2018 audit, the concerned firm and partner Abdus Sattar were barred for three and five years respectively due to failure to ensure a true and fair view in the financial statements.
Separately, Ata Khan and Co and its partner Maqbul Ahmed were declared ineligible for BSEC's auditor panel for up to five years over similar violations in the company's 2019 audit.
