FRC moves to penalise auditor over backdated signing of audit report
It stressed that adherence to proper documentation, approval processes, and verification mechanisms is essential to maintaining the integrity of the audit function
The Financial Reporting Council (FRC) has moved to penalise auditors involved in backdating audit reports, declaring the practice a serious form of professional misconduct.
In a newly issued guideline, the regulator recently said signing audit reports with backdated signatures violates the International Standards on Auditing (ISA) and undermines the credibility of financial reporting.
The FRC stressed that the date on an audit report is not a mere formality but a critical element that reflects when sufficient and appropriate audit evidence has been obtained and the audit process completed.
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The FRC stated that any attempt to manipulate the signing date of an audit report misleads stakeholders, including investors, regulators, and the public, and compromises the transparency and integrity of financial disclosures.
Under the new guideline, auditors must ensure that financial statements are approved by the board of directors before signing the audit report. The signing date must correspond with the completion of all audit procedures.
The regulator has also introduced stricter compliance requirements, including the mandatory use of the Document Verification System (DVS).
Auditors are required to obtain a Document Verification Code (DVC) within a specified timeframe – generally within three days of signing the audit report. In exceptional cases, the code may be obtained within 15 days with valid justification, subject to regulatory scrutiny.
The guideline further states that if auditors fail to comply with these timelines or attempt to backdate audit reports, such actions will be treated as clear evidence of professional misconduct.
In such cases, both the auditor and the audit firm may face disciplinary measures under the Bangladesh Chartered Accountants Order, 1973, and other relevant regulations.
The FRC also highlighted that there are currently no provisions under existing laws or auditing standards that permit backdating of audit reports under any circumstances.
It stressed that adherence to proper documentation, approval processes, and verification mechanisms is essential to maintaining the integrity of the audit function.
Market observers view this move as part of a broader effort by the regulator to strengthen financial governance and restore confidence in the auditing profession.
By tightening oversight and enforcing accountability, the FRC aims to ensure that financial statements accurately reflect the true position of companies and are free from manipulation.
The FRC reiterated that it will take a zero-tolerance approach to any deviation from established auditing standards, signalling a tougher enforcement stance in Bangladesh's financial reporting landscape.
