, Business and Finance, ICAB Icab lectures chapter 10, Business and Finance, ICAB Icab lectures chapter 10, Business and Finance, ICAB Icab lectures chapter 10, Business and Finance, ICAB

1. The professional Accountant
Accounting profession:
The Accounting profession concerned with the measurement, disclosure or provision of
assurance about financial information that make user to make resources allocation decisions.
The heart of accounting professions are – Financial reporting and Assurance
Why is accounting profession important?
1. The effective working of capital market: The investors get accurate, high quality and
open information from the Accountant’s reporting. So they can use these information
to make optimum economic decision and capital market will work effectively
2. The public interest: Areas in which professional accountants operate are technically
complex. The user (shareholders) having inadequate knowledge in these areas rely
upon the Accountants’ advice. So the public should have confident in their integrity.
What drives public confidence in the accountancy profession?
Public and investor confidence on financial reporting is achieved through the publication of
consistently high quality reports that are informative, relevant, transparent and free of material
misstatement. Maintaining this confidence requires
1. Professional responsibility (integrity)
2. Technical competence (expertise)
Professional responsibility (integrity)
People who have less expertise must be able to trust Accountants. The profession code of
ethics is a conceptual approach to professional ethics so that the member of the ICAB can
ensure that they warrant the trust. Member or ICAB in public practice observe five
fundamental principle of the ICAB code of Ethics
1. Integrity
2. Objectivity
3. Professional competence & due care
4. Confidentiality
5. Professional behavior
Besides Accounting profession have the following regulations by which public confidence is
maintained
 Rigorous entry and education requirements
 Specific additional requirements for professional accountants engaged in audit
 Oversight regulation of the ICAB professional regulation of its member by the
Ministry of Commerce
 A rigorous compliance procedures
Technical competence: the first of the above two is set for technical competence
1. ICAB’s entry and education requirements: these are aim to ensure that accountants
have the knowledge, understanding, skills, abilities, personal commitments and
professional abilities that are required
 Prerequisites for Articleship (Graduates or HSC with CGPA 5 or A Level)
 Completion of at least three years’ articleship with a CA firm
 Completion of a course of theoretical instructions
 Passing the ICAB professional examinations
 Submission of a certificate of course completion for membership signed by the
member responsible for the articleship

2.  Payment for admission or subscription fees
2. Continuing membership of the professional accountants- For this they must:
 Obey the institute’s rules and regulations
 Pay the subscription fees annually
 Undertake continuing professional education (CPE)
 Hold a certificate of practice (for member in public practice)
 Implement the code of ethics (for member in public practice)
Moreover the institute is a recognized professional regulator for the reserved area “Statutory
and regulatory audit”. Its audit regulations are drown up to meet the requirement of the
legislation which applies only to the members or firms registered or licensed to carry out the
activities. The contents of the regulations cover:
 Eligibility
 Conduct (integrity, monitoring, enforcement of discipline, etc)
 Competence (e.g, CPE)
The works of accounting profession: that support high quality financial reporting &
assurance
Maintaining control &
safeguarding assets
Financial Management Financial reporting
Recording of Transaction
Internal control
Constitute audit committee
Having nonexecutive director
Raising new finance
Using existing fund
Planning & control systems
Treasury management
On financial position
On financial performance
- applying professional &
accounting principle
Professional Principles:
Professional Principles guide the accountant in how to be seen to act in a professional manner
in the course of professional works
Integrity Objectivity Professional competence &
due care
A professional Accountant
should be-
-Straight forward
-Honest
-Fair
-Truthful
And not ----
Corrupted by self interest
Corrupted by undue influence
Associated with false info.
Associated with reckless info
In professional or business
judgements, A professional
Accountant should not
allow
-Bias
-Conflict of interest
-Undue influence of others
S/he should be independent
of mind
Professional Accountant should
-Have appropriate professional
knowledge & skill
-Exercise sound and
independent judgment
-Act diligently (carefully,
thoroughness & on timely basis
-Apply technical &
professional standard
Confidentiality Professional behavior
A professional Accountant
should
-keep confidential
-not disclose even
inadvertently in social envir.
-not use to obtain personal
advantage
A professional Accountant should
-comply with relevant laws and regulation
-Avoid any action that discredit the profession
-Conducting oneself with courtesy and consideration
They should avoid making exaggerated claim about what they
can do and what qualification and experience they possess and
avoid making disparaging reference to other works

3. Threats to professional principles
1. Self interest threats: results of dominance of interest of professional accountants or
close family member
2. Self review threats: results when a professional Accountant review or re-evaluate
his/her previous judgements
3. Advocacy threats: results when a professional Accountant promotes a position or
opinion to the point that subsequent objectivity may be compromised
4. Familiarity threats: results when a professional Accountant become too sympathetic to
the interest of particular group because of a close relationship
5. Intimidation threats
Safeguards against threats: two board categories
a. Safeguard created by profession, legislation or regulation
 Education, training & experience requirement for entry into the profession
 CPE requirements
 Corporate governance regulations
 Professional standard (the conceptual framework)
 Professional or regulatory monitoring and disciplinary procedures
 External review by a legally empowered third party of the reports, returns,
communications or information produced by a chartered accountant
 Effective, well-published compliance systems operated by the profession
 An explicitly stated duty to report breaches of ethical requirements
b. Safeguards in the work environment
Accounting Principles: These inform professional judgements. If in doubt about how to
report a transaction, the professional accountants should always come back to these
principles to inform the professional judgement that need to be made. Key accounting
principles are:
1. Accrual basis
2. Going concern
3. Double entry bookkeeping
4. Faithful representation: accuracy and completeness
5. Substance over form
6. Materiality
7. Neutrality
8. Prudence
9. Timeliness
10. Cost versus benefit
11. Consistency
12. Offsetting
Accounting standard: Accounting standards identify proper accounting practice for the
benefit of the preparers, auditors and users of the financial statements. These create a
common understanding between the users and preparers of the financial statements on how
particular items should be treated. There are two types of accounting standard in Bangladesh
1. International Standards: IASs and IFRSs produced by IASB
2. Bangladesh Standards: BASs and BFRSs produced by ICAB after adopting 1

4. The standard setting process: - IASB
 Study by staff of national requirements and practices
 An exchange of views with national standard setters, to establish the extend to
which an international standard is acceptable in national jurisdictions
 Consultation with the Standards Advisory Council
 A discussion paper
 An exposure draft, together with any dissenting opinions held by IASB members.
Its contents must be approved by eight of the fourteen members of IASB.
 Consideration of all comments received on an exposure draft during the comment
period
 Public hearing about, and field test of, the exposure draft
 Publication of the standard, together with any dissenting opinions held by IASB
members. Its contents must be approved by eight of fourteen members of IASB.
Role of professional accountants: They have tended to (1) work in public practice or (2) be
employed by an organization. The work or scope of them in public practice are Accounting,
Auditing and assurance, taxation, Management consulting, Investment business, insolvency,
Financial Management, Corporate finance, Information technology, forensic accounting, etc.
Qualification for appointment as external auditor:
1. May be a sole practioner or a partnership farm
2. Must be a member of ICAB
3. Must hold an appropriate qualification
Companies Acts set out who is not eligible to act as a company’s external auditors
 An officer or employee of the company
 A partner or an employee of any officer, employee to the company
 A person who is indebted to the company exceeding Tk. 1,000
 A person who is a director or member of a private company, or a partnet of a
firm, who is the managing agent of the company
 A person who is a director or holder of shares exceeding 5% of the subscribed
capital
Limits of the professional accountant’s responsibilities
Areas Specialized person
in the area
Limit of the Professional accountants
Legal
Matters
Qualified lawyers They should not take responsibility beyond those in
which they are technically competent to some degree
Admin.
matters
Company secretary/
Chartered secretary
In a very large organization, Chartered secretary will
do better than a professional accountant
Insurance
Claim
Insurance specialist/
actuaries
Beyond a certain level of complexity, insurance
specialists and actuaries should be used
Pension
fund
Actuaries or other
specialist
When the company face with issues concerning the PF
Property Valuers, architects In the case of acquisition, refurbishment or disposal of
assets
HR HR Professional In case of complexity of laws and regulation
surrounding HR