High time to strengthen accounting and accountability: Former CAG Muslim Chowdhury

Bangladesh has entered a high time to strengthen its accounting and auditing to promote accountability and transparency, said Mohammad Muslim Chowdhury, former finance secretary and comptroller and auditor general (CAG). 

"It is important for both the public and private sectors, as their progress has been slow," he said in a recent interview with The Business Standard.

He recommended reforms to speed up processes and appoint the right people to key positions.

"Audit reports submitted to the parliamentary committee on public accounts are often discussed five years later. By then, the officials responsible for answering might have retired or even passed away," he explained, highlighting why the government's auditing system fails to ensure accountability.

Like India, the UK, and other democratic countries, Bangladesh should appoint veteran opposition lawmakers to chair the public accounts committee.

"Once, it was mandatory to form the committee in the first parliamentary session. In the past decade, this requirement was relaxed, and the consequences are clear," said Chowdhury.

He added that to make public audits an effective tool for accountability, the reports should be discussed within the same year.

In the public sector, there are two types of audits—financial audits and performance audits.

"Although corruption is a real risk within the approved financial framework, we must still strengthen financial audits. However, to ensure cost-effective government spending, we should focus more on performance audits to achieve the expected benefits of government expenditures.

According to the former CAG, the Financial Reporting Council (FRC), established after the Financial Reporting Act of 2015, has helped improve accounting and auditing in the private sector, though there is still a long way to go.

The FRC has become a super regulator overseeing two self-regulated accounting institutions—the Institute of Chartered Accountants of Bangladesh (ICAB) and the Institute of Cost and Management Accountants of Bangladesh (ICMAB).

Like all other regulators, the FRC needs both independence and accountability, he opined, adding that the best way to ensure this accountability is for regulators to report to an effective parliamentary committee, rather than being subject to frequent government interference.

The appointment of the FRC chairman should not be delayed any longer, as the organisation has been operating under an acting chairman for months.

He suggested that the FRC chairman should not come from the regulated communities. Instead, the chairman should be an independent administrator who can also act as a facilitator. However, technocrats from professional communities should assist the chairman with technical tasks.

Muslim Chowdhury, who became the chairman of Sonali Bank PLC, the largest state-owned bank, last year, stressed the need to build a strong capital market to fix the flawed financing models in Bangladesh.

Due to the lack of capital market financing, both in debt and equity, commercial banks are lending to long-term projects.

"Investment bankers' role is being taken on by commercial bankers. This needs to stop to ensure the sustainability of the financial sector," he said.