The Bangladesh Securities and Exchange Commission (BSEC) has banned two audit practices and individual partners for lapses in their audit work on the financial statements of Fareast Islami Life Insurance and Ring Shine Textiles.
According to a report published in the Business Standard, the capital markets regulator’s actions followed regulatory probes that identified significant lapses in audit procedures including weak documentation and a failure to obtain sufficient audit evidence.
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In one case, Mahfel Huq and Co, Chartered Accountants and its former partner Abu Kaiser were penalised over their audit of Fareast Islami Life Insurance’s 2018 accounts.
A special review by the Institute of Chartered Accountants of Bangladesh reported that the company had issued an unmodified audit opinion even though there were significant anomalies related to land development, fixed deposits and related-party dealings.
On this basis, the BSEC has prohibited Mahfel Huq and Co from auditing listed securities for one year, while Abu Kaiser has been barred for two years.
The regulator has also taken measures over the financial reporting of Ring Shine Textiles.
For the company’s 2018 financial statements, the audit practice involved and partner Abdus Sattar have been banned for three years and five years, respectively, after failing to ensure that the accounts presented a “true and fair” picture.
In a separate ruling, Ata Khan and Co and its partner Maqbul Ahmed have been declared ineligible for inclusion in the BSEC’s panel of auditors for a period of up to five years.
This decision stems from what the regulator identified as similar breaches in the practice’s audit of the company’s 2019 financial statements.
According to the publication, with these moves, the BSEC aims to strengthen accountability in the capital market.
