An Overview of the performance of a Chartered Accountant firm – a case study on A. Matin & Co.
INTRODUCTION
Chartered Accountants in Bangladesh
The Institute of Chartered Accountants of Bangladesh (ICAB) is the National Professional Accounting Body of Bangladesh established under the Bangladesh Chartered Accountants Order 1973 (Presidential Order No. 2 of 1973).
To meet the ever-changing global economic demands dominated by WTO regime, the ICAB is fast becoming a body of professionals whose expert services will be highly sought after-
To anticipate, meet and exceed the rising expectations of the society.
To better use of opportunities to face the challenges of fiercer global competition.
To recognize the changes in economy/ business and recognize the path to success by adopting changes in knowledge management and acquiring skills.
To recognize its role as a regulatory body to equip its members (Chartered Accountants) with top-quality education and values.
To recognize the needs known as world Class Advisors.
The mission of ICAB is to provide leadership in the development, enhancement and coordination of the Accountancy Profession in Bangladesh in order to enable the profession to provide services of consistently high quality in the public interest.
As on 01 July 2010, the Institute had 1013 members (including 32 females) of whom 865 were resident in Bangladesh and 148 were resident abroad. Associate and Fellow memberships are offered by the Institute. Persons passing the qualifying Final Examination of the Institute are offered Associate ship (ACA) while fellowship (FCA) is offered to members having at least five years post-associate ship experience and fulfilling relevant other requirements. Out of 1013 members, 315 are practicing as public accountants and the rest 698 are serving in various key positions in public and private organizations-both at home and abroad. As on the same date, there were 3926 articled students (including 327 females).
Introduction of A. Matin &Co.
Mr. A K Abdul Matin:
Mr. A K Abdul Mation was the founder of A. Mation & Co in 91 kakrail (3rd floor) Dhaka-1000. He had completed her FCA in 1989. The firm was established 20 years back in 1991. He had fulfillment of all the requirements of ICBA for foundation of a firm. This firm maintains by him. It has 29 articled student & 26 office staff. The firm maintains a ‘state of the art’ logistics support fully equipped with world’s most advanced technologies. It has a full-fledged computer sector with a well-trained staff, which ensured quicker service. The firm also uses the most advanced communication technology to ensure faster correspondence and feedback.
Matin &Co.
A.Matin & co. (Chartered Accountants) is a firm of Chartered Accountants registered with the Institute of Chartered Accountants of Bangladesh and is on the panel of auditors of Securities and Exchange Commission of Bangladesh, the central Board of Revenue, the Stock Exchange.
The general practice & style of work attracts entrepreneurs from many walks of life who feel that they will benefit from a close working relationship with A. Matin &Co. firm. It is easy to understand that different economic needs are required to be financially successful for individuals and business in today’s ever-increasing economic environment. A.Matin & co. have ability to work in Bangladesh.
A.Matin & co. will help you to their level best with you independent financial needs and requirements. With their friendly and well trained staff that has many years of experience in dealing with a variety of types of business, they will be able to guide you in the best manner, with their help and professional experience; your finance will be worry of the past.
Establishment of Firm
The firm was established 20 years back in 1991. The major source of our growth is through referrals by our satisfied clients, banks, Government department and other professionals.
The firm was originally established by A K Abdul Matin (FCA), Senior Partner of the firm.
Background
The internship Program of BBA student of the Department of Business Administration, International Islamic University Chittagong (DC),is an integral part of BBA program. Four ( 4) credit hours for this internship program out of 131 credit hours of the program. The program is of three months duration. I was assigned to A.Matin & Co. (Chartered Accountants).To compete with the supervisor of the program I have selected a topic An Overview of the performance of a Chartered Accountant firm- a case of A. Matin & Co.
Origin of the report
The report entitled An Overview of the performance of a Chartered Accountants firm a case of A. Matin & Co. has been prepared as a partial fulfillment of BBA program authorized by the Department of Business Administration, International Islamic University Chittagong (DC),
Scope of the Report
I audited different types of company through this CA firm. I had scope to learn about the group’s activities while I came into contact with different departments. I had opportunity to inform about the Audited Company’s performance and financial condition.
My internship topic is “An Overview of the performance of a Chartered Accountant firm- a case of A. Matin & Co.”. CA firm evaluate and verify all the financial and non-financial activity of its client company and give them valuation report after the end of evaluation for the fairness of the company which is most important document for a company. I was worked with this Audit group and perform my job according to the rule.
Objectives of the study
The first objective of writing the report is fulfilling the partial requirements of the BBA program. In this report, I have attempted to give on overview of A. Matin &Co. chartered accountant in general. Following are the main objectives
To become familiar with the history and operations of A. Matin & Co. in Bangladesh.
To go though the educational background of the owner A K Abdul Matin.
To go all the financial and non-financial activity of its client company and give them valuation report after the end of evaluation for the fairness of the company which is most important document for a company.
To identify the Major mistake of its client accounts.
To find out how to encourage of its clients for better performance for their business.
To understand the audit process of A. Matin & Co. for different firms.
To check the categories of audit fees for different firm.
To find out why need audit is important of different company.
Methodology of the study
I prepared this report in 3 segments. In my first part I explained about the 1st part Audit and 2nd Auditors and 3rd part I focused on the “Determination Audit fees of”. I had to collect data for analyzing Audit fees. I had to rely on Audit Report of the client company’s for regression analysis. Secondly, I talked with officials to know about the Audit fees system.
I have used both primary and secondary data to collect the information. But to collect the information I mainly used secondary data. The methodology of this report is very different from conventional reports. I have emphasized on the practical observation to write this report and have to collect some primary data. Nevertheless, eventually almost the entire report consists of my practical observation. While preparing the report, I have taken information from the following sources:
Primary Sources:
Primary data were collected by the casual interviews from senior officer of the firm.
Personal investigation with clients of the firm.
Secondary Sources:
Secondary information was collected from The Institute of Chartered Accountants of Bangladesh (ICAB), various books, journals, manuals, and also from the web sites.
Various publications on banking operation,
Website of The Institute of Chartered Accountants of Bangladesh (ICAB).
Website of A. Matin & Co.
Annual Report of the A. Matin & Co.
Limitations of the study
There are some limitations in our study. I faced some problems during the study which I am mentioning them as below-
Lack of time:
The time period of this study is very short. I had only 8 weeks in my hand to complete this report, which was not enough. So I could not go in depth of the study. Most of the times the officials were busy and were not able to give us much time.
Insufficient data:
Some desired information could not be collected due to confidentiality of business.
Lack of monitory support:
Few officers sometime felt disturbed, as they were busy in their job. Sometime they didn’t want to supervise us out of their official work.
Iv) Other limitation:
As we are newcomer, there is a lack of previous experience in this concern. And many practical matters have been written from our own observation that may vary from person to person.
Audit
Audits are performed to ascertain the validity and reliability of information; also to provide an assessment of a system’s internal control. The goal of an audit is to express an opinion on the person / organization /system (etc.) in question, under evaluation based on work done on a test basis.
Due to practical constraints, an audit seeks to provide only reasonable assurance that the statements are free from material error. Hence, statistical sampling is often adopted in audits. In the case of financial audits, a set of financial statements are said to be true and fair when they are free of material misstatements – a concept influenced by both quantitative (numerical) and qualitative factors.
Auditing is a vital part of accounting. Traditionally, audits were mainly associated with gaining information about financial systems and the financial records of a company or a business (see financial audit). However, recent auditing has begun to include non-financial subject areas, such as safety, security, information systems performance, and environmental concerns. With nonprofit organizations and government agencies, there has been an increasing need for performance audits, examining their success in satisfying mission objectives. As a result, there are now audit professionals who specialize in security audits, information systems audits, and environmental audits.
In financial accounting, an audit is an independent assessment of the fairness by which a company’s financial statements are presented by its management. It is performed by competent, independent and objective person(s) known as auditors or accountants, who then issue an auditor’s report based on the results of the audit.
In cost accounting, it is a process for verifying the cost of manufacturing or producing of any article, on the basis of accounts measuring the use of material, labor or other items of cost. In simple words the term, cost audit, means a systematic and accurate verification of the cost accounts and records, and checking for adherence to the cost accounting objectives. According to the Institute of Cost and Management Accountants of Bangladesh, a cost audit is “an examination of cost accounting records and verification of facts to ascertain that the cost of the product has been arrived at, in accordance with principles of cost accounting.”
Types of auditors
Auditors of financial statements can be classified into two categories:
External auditor / Statutory auditor :
External auditor / Statutory auditor is an independent Public accounting firm engaged by the client subject to the audit, to express an opinion on whether the company’s financial statements are free of material misstatements, whether due to fraud or error.
For publicly-traded companies, external auditors may also be required to express an opinion over the effectiveness of internal controls over financial reporting. External auditors may also be engaged to perform other agreed-upon procedures, related or unrelated to financial statements. Most importantly, external auditors, though engaged and paid by the company being audited, are regarded as independent auditors.
The most used external audit standards are the US GAAS of the American Institute of Certified Public Accountants; and the ISA International Standards on Auditing developed by the International Auditing and Assurance Standards Board of the International Federation of Accountants.
Internal auditor:
Internal auditors are employed by the organization they audit. They perform various audit procedures, primarily related to procedures over the effectiveness of the company’s internal controls over financial reporting. Due to the requirement of Section 404 of the Sarbanes Oxley Act of 2002 for management to also assess the effectiveness of their internal controls over financial reporting (as also required of the external auditor), internal auditors are utilized to make this assessment. Though internal auditors are not considered independent of the company they perform audit procedures for, internal auditors of publicly-traded companies are required to report directly to the board of directors, or a sub-committee of the board of directors, and not to management, so to reduce the risk that internal auditors will be pressured to produce favorable assessments.
The most used Internal Audit standards are those of the Institute of Internal Auditors.
Objectives and advantages of Audit:
The objectives of an audit may broadly be classified as:
Primary Objectives & Secondary objectives.
Primary Objectives:
The main purpose of audit is to judge the reliability of the financial statements and the supporting accounting records for a particular financial period. The Companies Act, 1956 requires that the auditor of a company has to state whether in his opinion the accounts disclose a true and fair view of the state of company’s affairs, profit and Loss Account and Balance Sheet of the state of affairs of a business, the auditor carries out a process of examination and verification of books of accounts and relevant documents. Such an examination will enable the auditor to report to his client on the financial condition and working results of the organization. While carrying out the examination of the various books of accounts, relevant documents and evidences, the auditor may came across certain errors and frauds. Despite such a possibility the detecting of errors and frauds is an incidental object. However, laymen have always associated the detection of errors and frauds as the main function of an auditor which is not true. At the same time audit also discloses how far the accounting system adopted in the organization is adequate and appropriate in recording the various transactions as well as the weakness of these systems.
Secondary Objectives:
As stated above, an auditor has to examine the books of accounts and the relevant documents in order to report on the financial condition of the business. In the process of such an investigation of accounts certain errors and frauds may be detected. These are discussed under the following two heads:
Detection and Prevention of Errors
Detection and Prevention of Frauds
Detection and prevention of Errors: Various types of errors are mentioned below:
Clerical Errors:
Such an error arises on account of wrong posting. For example, an amount received from Thomas is credited to Sunny. Though there is wrong posting still the trial balance will agree. Clerical errors are of three types as follows:
Errors of Commission:
There errors are caused due to wrong posting either wholly or partially of the Amount in the books of original entry or ledger accounts or wrong calculations, wrong totaling, wrong balancing, and wrong casting of subsidiary books. For example Rs. 500 is paid to a vendor and the same is recorded in the cash book. While posting to the ledger, the Vendor’s account is debited by Rs. 500. It may be due to carelessness of the clerk. Most of the errors of commission are reflected in the trial balance and these can be discovered by routine checking of the books.
ii) Errors of Omission:
Such errors arise when the transactions are not recorded in the books of original entry or posted to the ledger. For example, sales are note recorded in the sales book or omission to enter invoices in the purchase book. For example Rs. 200 is paid to a vendor. The entry in the cash book is made on the credit side but posting to the vendor side is omitted. Errors due to entire omission will not affect the trial balance whereas errors due to partial omission will affect the trial balance and can be detected.
Compensating Errors:
When two or more errors are committed in such a way that the result of these errors on the debits and credits is nil, they are referred to as a compensating errors. For example, Anil’s account which was to be debited for Rs. 500 was credited for Rs. 500 and similarly, Sunil’s account which was to be credited for Rs. 500 was debited for Rs.500. These two mistakes will nullify the effect of each other. Both the sides of the trial balance are equally affected. As such, these errors are difficult to locate unless detailed investigation is undertaken.
Errors of Principle:
Such errors are committed when some fundamental principle of accounting is not properly observed in recording transaction. For example, if there is incorrect allocation of expenditure or receipt between capital and revenue or when closing stock is over-valued. Though trial balance will not disagree, the Profit and Loss Account may be very much affected. Sometimes, such errors are committed deliberately to falsify the accounts or unintentionally due to lack of knowledge or sound principles of accounting. Thus, a thorough examination is to be done to locate such errors.
Detection and Prevention of Frauds:
Frauds are always committed deliberately and intentionally to defraud the proprietors of the organization. If the frauds remain undetected, they may affect the opinion of the auditor on the financial condition and the working results of the organization. It is, therefore, necessary that the auditor should exercise utmost care to detect such frauds.
Audit in Bangladesh
The Companies Act 1994 makes it compulsory for every company to have its accounts audited by qualified auditors. The desirability of this provision can be based on the fact that shareholders who contribute the capital of the company leave its management and control in the hands of directors. Auditors are there to safeguard the interest of shareholders.
The qualified chartered accountants from the Institute of Chartered Accountants of Bangladesh (ICAB) are eligible for auditing practices after getting sufficient experience in this field through a firm established through the approval of ICAB.
Chronological incidents of Company Audit (ICAB, 1999) reveal the following sequential incidents towards auditing standards and practice in Bangladesh over the years:
1850: Indian Joint Stock Companies Act (enacted in UK as the 1844 Act)
All incorporated companies required to have their annual financial statements audited. The Act did not require that the auditor be independent or be a professional accountant. The audit report was to state whether the balance sheet gave a full and fair view of its state of affairs.
1859:Nichols Case: The judgment stated that it was par t of the auditors duty to discover fraudulent misrepresentation. This was the start of fraud and error detection as the main audit objective for the next 80 years or so.
1896: Re. Kingston Cotton Mill: The judge remarked that the auditor was a watchdog not a bloodhound, and that what was required of him was the exercise of what was regarded at the time as reasonable skill and care in the circumstances.
1913: Companies Act (India): Every company required to have its accounting books and records audited. A report had to be made on the balance sheet and profit and loss account. Auditors had to be professionally qualified.
1932: Auditors Certificate Rule: A comprehensive set of rules governing the regulation and training for the auditors.
Amendments to 1913 Act: Increasing awareness took place about the importance of financial information to investors.
1947: Partition adopted by Pakistan.
1950: Auditors Certificate Rules 1950: These replaced the 1932 rules. Under these rules persons who fulfilled specified conditions in r elation to practical and theoretical training could have their names entered in the register and use the designation Registered Accountant´. Only a registered accountant could be appointed auditor of a public limited company.
1961:Institute of Chartered Accountants of Pakistan (ICAP): ICAP was formed from registered accountants. Government created department of accountancy.
1973:Formation of ICAB: Bangladesh liberated in 1971 creating a major problem because of the lack of an institute. In 1972 Institute of Chartered Accountants of Bangladesh formed under Bangladesh Chartered Accountants Order 1973 (P.O. No. 2 of 1973).
1973:Onwards: Bangladesh had been participating in the creation of International Accounting and Auditing Standards. Increasing awareness of the role of accounting and auditing was been going on.
Control, Corporate Governance and Audit:
The term control is used at a wide range of levels. At one extreme it means effects to achieve organizational goals and objectives; at another extreme the concern of control is to see if there are two approved signatures on a disbursement check; and in between there are all sorts of resources and operational activities, which must be dealt with (Chowdhury, 2004). Otley and Bery (1980) view that the study of organization and the study of control are inter elated.
According to McMahon and Ivancevich (1976), an organization implies control. The above view has support from Tannenbaum (1968) when he claims that an organization without some form of control is impossible. He states that an organization can be seen as the relationship of human beings, the exercise of power, use of resources, and the distribution of resources. All these organizational issues need to be planned, carefully designed, directed, motivated, and controlled.
There are control mechanisms internal and external to the organization. The external control mechanisms include market competition, government regulations, the market for takeovers, and corporate governance and monitoring by shareholders, auditors, and independent outside experts (Chowdhury, 2004). Committee on Corporate Governance (September 1999) suggests that external auditors shall per for m fair audits independently from the corporation concerned, its management and controlling shareholders, so that shareholders and other users may maintain confidence in the corporations accounting information. Sir Adrin Cadbury perfectly said, Corporate governance is considered withholding balance between economic and social goals and between individual and community goals. The aim is to align as nearly as possible the interests of individuals, corporations and society´ (Cadbury, 2003). Corporate governance has become a top priority for the regulatory bodies with the objective of providing better and effective protection to all stakeholder s and also to make the market confident as research reveals a positive correlation between corporate governance and share pr ices (Ahmad, 2004). Various elements of corporate governance discussion includes the legal framework, ownership structure, shareholding and protection of minority shareholders, boar d of directors, and the role of capital markets and Securities and Exchange Commission (SEC) in corporate governance, accounting and auditing standards, independent auditors report(Ahmed, 2005).Corporate Governance Committee (1997) stated remarkably, ³An audit committee is to be created within the board of directors. All the members of the committee are to be non-executive directors. Its function will be to audit the quality of compliance achievements, as well as the appropriateness of risk management of management. Auditors should audit beyond the normal inspection of compliance by management, and at the very least should make due judgments on the strategic decisions made by the board of directors. The quality of corporate auditing has to be upgraded by designating more than one independent auditors and by a more systematized auditing´(Corporate Governance Committee, 1997).
Economic significance of the audit:
Economic significance of the audit of the financial statements of the company emphasizes the great importance of the audit. ICAB well stated: In Bangladesh as in most other developed and developing societies, the owners of resources place them in the custody or stewardship of others. Examples of this process are the shareholders (owners) of a company committing the resources of the company to the stewardship of the directors; the public at large committing publicly
Owned resources to the stewardship of elected representatives. The owners hold the stewards accountable. Under the stewardship system of financial reporting, the shareholders, who defector represent the ownership of corporate entity, are distinct separate from the board of directors, who defector represent the management of the company. The share holders appoint the directors in the company annual general meeting to manage the entity in the best interest of the ownership. The shareholders need an honest, unbiased, objective, independent expert, professional opinion, and evaluation of the performance of responsibilities entrusted upon the directors. The management is unlikely to r ender that opinion and appraisal with any degree of objectivity.
Hence the auditor acts as a ³bridge´ helping to make management accountable to shareholder, through his audit report on the company’s financial information. The concept of audit independence also enumerates from the application of this system of stewardship reporting of financial reporting. The accountability is frequently in the form of annual reports incorporating financial statements. The typical example is the annual report and accounts of limited companies produced by the directors in accounting for their stewardship to the shareholder s. Before these financial statements can be accepted by the owners, they need to be examined by audit (ICAB)
Thus the role of the audit is essentially linked with the role of accounting information, and may be summarized (ICAB, 1 999):
The owners of resources ( investors) must make decisions on the employment of these resources;
(b)Such decisions are linked with the expected returns from investments;
In the absence of forecast information the investors look at historical data as a guide to the future;
Such data is provided by the stewards of the resources (e.g. the company management);
Since their interest may conflict with the investors, the audit serves the function of lending credibility to the financial statements. We have seen that the need for an external audit arises primarily when the ownership and management of an enterprise are separated. There are, however, certain inherent advantages in having financial statements audited even where no statutory requirement exists for such an audit:
Disputes between management may be more easily settled. For instance, a partnership which has complicated profit-sharing arrangements may require an independent examination of the accounts to ensure as far as possible an accurate assessment and division of those profits;
Major changes in ownership may be facilitated if past accounts contain an unqualified audit report. For instance, where two sole traders merge their business to form a new partnership;
Applications to third parties for finance may be enhanced by audited accounts. However, do remember that a bank, for instance, is likely to be far more concerned about the future of the business and available security than the past historical cost accounts, audited or otherwise;
An auditor may well discover major errors and fraud during his audit, even though such a discovery is not the primary objective of the audit;
The audit is likely to involve an in-depth examination of the business and so may enable the auditor to give more constructive advice to management on improving the efficiency of the business (ICAB, 1999).
General principles of an Audit:
The Auditor should comply with the Code of Ethics for Professional Accountants issued by the Council of the Institute of Chartered Accountants of Bangladesh. Ethical principles governing the auditor’s professional responsibilities (ICAB, 2004) are:
Independence
Integrity
Objectivity
Professional competence and due care;
Confidentiality
Professional behavior and
Technical Standards
Scope of an audit:
The term scope of an audit´ refers to the audit procedures deemed necessary in the circumstances to achieve the objective of the audit. The procedures required to conduct an audit in accordance with BSAs should be determined by the auditor having regard to the requirements of BSAs, relevant professional bodies, legislation, regulations and, where appropriate, the terms of the audit engagement and reporting requirements.
The Audit Report
The final phase of an audit engagement is reporting the findings. To meet his or her reporting responsibilities, the auditor must (1) have a thorough understanding of the four reporting standards, (2) know the exact wording of the auditor’s standard report and the conditions that must be met for it to be issued, (3) understand the types of departures from the standard report and the circumstances when each is appropriate, and (4) be knowledgeable of certain other special reporting considerations (Boynton, 2001).
Bangladesh Standards on Auditing 700: The Auditor’s Report on Financial Statements:
Bangladesh Standards on Auditing 700: The Auditor’s Report on Financial Statements described the following guidelines to comply by the auditor.
The purpose of this Bangladesh Standard on Auditing (BSA) is to establish standards and provide guidance on the form and content of the auditor’s report issued as a result of an audit performed by an independent auditor’s of the financial statements of an entity. Much of the guidance provided can be adapted to auditor’s reports on financial information other than financial statements.
Basic Elements of the Auditor’s Report According to BSA 700:
Title
Addressee
Opening or introductory paragraph
Scope paragraph (describing the nature of an audit)
Opinion paragraph
Date of the report
Auditor’s address
Auditors signature
Types of Audit Opinions:
The opinions expressed in the auditor’s report may be:
Unqualified
Other than Unqualified
Qualified
Adverse, or
Disclaimer of opinion.
Current status of Audit fees in Bangladesh according to ICAB:
Various Membership Fees and Charges (w.e.f. 01 July 2010)
Nature of Fees
For Members in Service
For Members in Service
For Members in Practice
For Members in Practice
Associate
Taka
Fellow
Taka
Associate
Taka
Fellow
Taka
Annual Membership Fees
6,000/-
7,500/-
6,000/-
7,500/-
Annual Fees for Certificate of
Practice
—– ——- 9000/- 12,5000/-
Sub-total =
6,000/- 7,500/- 15,000/- 20,000/-
Other charges
Annual Contribution to ICAB Members Welfare Fund
500/- 500/- 500/- 500/-
Cost of List of Members & Firms
200/- 200/- 200/- 200/-
Sub-total = 700/- 700/- 700/- 700/-
Total=
6,700/-
8,200/-
15,700/-
20,700/-
FEES SCHEDULE FOR PRACTICING MEMBERS
[Effective from 01 July 2004]
BASIS OF CHARGING MINIMUM FEES FOR AUDIT AND OTHER PROFESSIONAL SERVICES RENDERED BY CHARTERED ACCOUNTANTS IN PRACTICE OR FIRMS OF SUCH CHARTERED ACCOUNTANTS
Part-1
The Institute of Chartered Accountants of Bangladesh (ICAB) was established under the Bangladesh Chartered Accountants Order 1973 (President’s Order No. 2 of 1973) for the purpose of regulating the profession of Accountants and for matters connected therewith in the country.
Schedule C (Part-1) of the Bangladesh Chartered Accountants Bye-Laws 1973 framed under the aforementioned Order, stipulates, inter alia , that a Chartered Accountant in practice shall be guilty of professional misconduct if he:
Accepts a position as Auditor previously held by another Chartered Accountant without first communicating with him in writing;
accepts an appointment as Auditor of a Company without first ascertaining from it whether the requirements of Section 210 of the Companies Act 1994 in respect of such appointment have been duly complied with;
Accepts a position as Auditor previously held by some other Chartered Accountant in such conditions as to constitute undercutting;
solicits clients or professional work either directly or indirectly by circular, advertisement, personal communication or interview or by any other means;
The Council of the Institute resolved that a Chartered Accountant in practice or a firm of such Chartered
Accountants may:
Respond to advertisements inviting applications for appointment of Auditors;
Respond to tenders or circulars inviting quotations for professional services restricted to Chartered Accountants either by statute or in terms of such tenders or circulars;
Request for inclusion of the firm-name in the panel for appointment as Auditors; and
Quote fees within the framework of the enclosed Fees Schedule as approval by the Council-ICAB in its meeting held on 18, April 2004.
It shall not, however, be permissible for a Chartered Accountant in practice or a firm of such Chartered Accountants to pay earnest money, security deposit, etc. in reply to such advertisements, tenders, circulars or enquiries.
Part-II: of the Fees Schedule will not be applicable for non-audit work.
FEES SCHEDULE
PRIVATE LIMITED COMPANIES:
Category
Gross Assets or Gross Turnover, whichever is
higher
Minimum Audit
Fees
A-(i)
Amount not exceeding Tk . 10 lack
Tk . 7,500
A – (ii)
Amount exceeding Tk . 10 lac but not exceeding Tk . 25 lac
Tk . 15,000
A – (iii)
Amount exceeding Tk . 25 lac but not exceeding Tk . 50 lac
Tk . 30,000
A – (iv)
Amount exceeding Tk . 50 lac but not exceeding Tk . 1 crore
Tk . 40,000
A – (v)
Amount exceeding Tk . 1 crore but not exceeding Tk . 5 crore
Tk . 80,000
A – (vi)
Amount exceeding Tk . 5 crore but not exceeding Tk .10 crore
Tk . 1,00,000
A – (vii)
Amount exceeding Tk . 10 crore but not exceeding Tk .50 crore
Tk . 1,00,000 + TK 10,000 for every TK 5 crore increase.
A – (viii)
Amount exceeding Tk . 50 crore
Tk . 1,80,000 + TK 10,000 for every TK 10 crore increase.
PUBLIC LIMITED COMPANIES:
Category
Minimum Audit Fees
Minimum Audit Fees
Gross Assets or Gross Turnover, Listed Cos whichever is higher.
Listed Cos Non-Listed Cos
B – (i) Amount not exceeding Tk . 1 Cos. Tk . 60,000
Tk . 50,000
B – (ii) Amount exceeding Tk . 1 crore but not exceeding Tk . 10 crore Tk .1,20,000 Tk . 100,000
B – (iii) Amount exceeding Tk . 10 crore but not exceeding Tk . 50 crore Tk .1,20,000 +
Tk 15,000 for every Tk 5 crore increases. Tk .1,00,000 +
Tk 12,000 for every Tk 5 crore increases
B – (iv) Amount exceeding Tk . 50 crore. Tk . 2,40,000 +
Tk 10,000 for every Tk 10 crore increases. Tk .1,96,000 +
Tk 8,000 for every Tk 5 crore increases.
SECTOR CORPORATIONS INCLUDING INSURANCE, AUTONOMOUS AND SEMI-AUTONOMOUS BODIES:
Category
Gross Assets or Gross Turnover, whichever is higher
Minimum Audit Fees
C-(i)
Amount not exceeding Tk . 50 lac
Tk . 25,000
C – (ii)
Amount exceeding Tk . 50 lac but not exceeding Tk .
2.5 crore
Tk . 50,000
C – (iii)
Amount exceeding Tk . 2.5 crore but not exceeding Tk
. 10 crore
Tk . 1,00,000
C – (iv)
Amount exceeding Tk. 50 crore
Tk . 2,00,000
C – (v)
Tk . 2,00,000 +
Tk . 10,000 for every
Tk . 10 crore increase.
BANKS AND OTHER FINANCIAL INSTITUTIONS EXCLUDING INSURANCE:
Category
Gross Assets or Gross Turnover, whichever is higher
Minimum Audit Fees
D-(i)
Amount not exceeding Tk . 50 crore
Tk . 2,50,000
D – (ii)
Amount exceeding Tk . 50 crore but not exceeding Tk .
100 crore Tk . 3,50,000
D – (iii)
Amount exceeding Tk . 100 crore
Tk . 3,50,000 +
Tk . 20,000 for every
Tk . 20 crore increase
NON-GOVERNMENT ORGANIZATIONS:
Category
Gross Assets or Gross Turnover, whichever is higher Minimum Audit Fees
E-(i)
Amount not exceeding Tk . 10 lac Tk . 15,000
E – (iii)
Amount exceeding Tk . 10 lac but not exceeding Tk . 25 lac Tk . 30,000
E – (iii)
Amount exceeding Tk . 25 lac but not exceeding Tk . 50 lac Tk . 50,000
E – (iv)
Amount exceeding Tk.50 lac but not exceeding Tk . 1 crore Tk . 80,000
E – (v)
Amount exceeding Tk . 1 crore Tk . 80,000 +
Tk . 5,000 for every
Tk . 25 lac increase
PROPRIETORSHIP CONCERNS, PARTNERSHIP FIRMS, PROVIDENT FUNDS AND CHARITABLE INSTITUTIONS, VOLUNTARY ORGANIZATIONS AND OTHERS NOT COVERED UNDER PARAGRAPHS A, B, C, D AND E ABOVE:
Category
Gross Assets or Gross Turnover, whichever is higher Minimum Audit
Fees
F-(i) Amount not exceeding Tk . 20 lac Tk . 10,000
F – (ii) Amount exceeding Tk . 20 lac but not exceeding Tk . 50 lac
Tk . 15,000
F – (iii) Amount exceeding Tk . 50 lac but not exceeding Tk . 1 crore
Tk . 20,000
F – (iv) Amount exceeding Tk . 1 crore but not exceeding Tk . 5 crore Tk . 30,000
F – (v) Amount exceeding Tk . 5 crore but not exceeding Tk . 10 crore Tk . 50,000
F – (vi) Amount exceeding Tk . 10 crore Tk . 50,000 +
Tk . 5,000 for every Tk . 5 crore increase
EDUCATIONAL INSTITUTIONS:
In view of national importance of education and educational institutions being non-trading in nature, audit fees as prescribed by the concerned appointing authorities in consultation with ICAB from time to time shall be acceptable.
CO-OPERATIVE SOCIETIES:
The audit fees chargeable for auditing the accounts of co-operative societies including co-operative banks shall be as per provisions of the Co-operative Societies Act, 1940 and the Co-operative Societies Ordinance,
1984.
MINIMUM HOURLY RATES OF FEES CHARGEABLE IN RESPECT OF ALL PROFESSIONAL WORK AS REFERRED TO UNDER PARAGRAPHS A TO H ABOVE:
Category of Personnel
Professional Qualifications & Experience
Minimum Fees per hour
Principal/Partner
Chartered Accountant ( Practicing Member of
ICAB)
Tk . 1,500-Tk. 2,000/-
Qualified Assistance Chartered Accountant (Employee Member of
ICAB)
Tk . 1,000-Tk 1,200/-
Senior Assistant Course Completed CA Student and CA Articled
Student having completed at least 02 years of article-ship Tk . 300- Tk . 500/-
Semi-Senior
Assistant CA Articled Student having completed 1-2 years
of article-ship
Tk . 200- Tk . 300/-
Junior Assistant CA Articled Student not having completed
more than 01 year of article-ship Tk . 150/-
2.00 RATES OF FEES AS APPROVED UNDER CLAUSE 1.00 OF PART III ABOVE SHALL BE UNIFORMLY CHARGED BY ALL CHARTERED ACCOUNTANTS IN PRACTICE OF FIRMS OF SUCH CHARTERED ACCOUNTANTS OF BANGLADESH WHILE UNDERTAKING AUDIT AND OTHER PROFESSIONAL WORK WITHIN THE TERRITORY OF BANGLADESH, SUBJECT TO THE PROVISIONS AS CONTAINED IN THE FOLLOWING SUB-CLAUSES:
For the purpose of charging the minimum audit fees as approved under paragraphs A, B and C of Clause 1.00 of part III above, 150% of the previous year’s audit fees shall be deemed to be the minimum audit fees of the year if the fees calculated on the basis of the approved rates exceed 150% of the previous year’s audit fees;
For the purpose of calculating the minimum audit fees as approved under paragraphs D and F of clause 1.00 of part III above, Gross Assets shall mean and include total fixed assets and current assets excluding fictitious assets, if any, of an organization as appear on the balance sheet under audit;
While charging fees, members in practice may quote fees, broadly based on the afore-mentioned minimum rates of fees;
Notwithstanding anything contained in the normal definition of Gross Turnover, for the purpose of calculating the approved minimum audit fees of any organization, ‘Gross Turnover’ shall mean and include;
Total amount of sales including all other income and earnings of the year in case of all manufacturing and trading organizations;
Total gross premium income including all other income and earnings of the year in case of all insurance organizations;
Total amount of interest, discount, commission, and exchange brokerage and all other income and earnings of the year in case of banks and other financial institutions;
Total amount of commission including all other income and earnings of the year in case of travel agencies, indenters, brokers and other organizations running on commission earning basis;
Total income in the form of contributions, subscriptions, donations, grants, aids and all other income and earnings of the year in case of provident funds, charitable institutions and voluntary organizations ; and
Total receipt/bills accounted for and all other income and earnings of the year in case of construction companies and other organizations not covered under i to v above.
Appointment of Auditors for any special audit of branches of banks, insurance corporations companies or other organizations shall be treated as an appointment relating to a separate audit , and audit fees payable for such special audits shall be treated as part of the approved annual or statutory audit fees payable by the clients concerned;
In case of organizations under installation/awaiting commissioning, acceptance of minimum audit fees at a reduced rate of 50% of the approved minimum audit fees, may be considered until such time as such organizations go into commercial production;
In case of dormant companies (i.e. companies not in commercial operation), acceptance of minimum audit fees shall be subject to mutual consent of the clients and the Auditors;
In the context of the above-stated approved rates of minimum audit fees , ‘under-cutting’ shall not include any reduction of fees which may arise due to natural reduction of Gross Assets, Gross Turnover or Gross Grants, as appropriate, of the year under audit as compared to those of the previous year, of any organization;
The minimum audit fees calculated at the rates as approved under paragraphs A, B, C, D and E of clause 1.00 of part III above, shall mean minimum audit fees payable to each of the Joint Auditors where more than one Auditor is appointed.
Findings & Analysis
The major findings of the Bangladesh auditing Reporting is to improve the relevance, reliability & comparability of the information that a reporting entity provides in its clients financial statement about a business combination of A Mmatin & Co. Following the some major finding of this study as:
A Matin & Co. is the helpful place for any companies (e.g. public ltd, Private ltd, educational institute or other company) auditing.
It is the institute where any student can completed his Course completes (C.C.) degree.
A Matin&Co. recognize its role as a regulatory body to equip its members (Chartered Accountants) with top-quality education and values.
It has a full-fledged computer sector with a well-trained staff, which ensured quicker service.
The firm also uses the most advanced communication technology to ensure faster correspondence and feedback.
Its evaluate and verify all the financial and non-financial activity of its client company and give them valuation report after the end of evaluation for the fairness of the company which is most important document for a company.
I am working with this Audit group and perform my job according to the rule A Matin & Co.
I also know about the Auditing system of A Matin &Co. This companies auditing system is batter from others CA firm.
The firm follows the audit fees from the role of ICAB.
Recommendations
Following are my recommendations for A. Matin &Co. to increase the quality of service.
Learn to listen to your customers first. Really listen to them ask what you can do to help them. This is most important step in preventing problems and the only way you can solve complaints if they come up.
Look at all complaint about your service as an opportunity to improve. Aim to resolve any complaint quickly efficiently.
Establish at all complaint about your service is recognized and rewarded and poor service is challenged and rectified.
Have a fun staff meeting where good service elements are discussed and role played.
Ensure that your staff feels they are an important part of your success. Have fun team building days as well as formal meeting.
Lead by example – show respect for every person at every level in your company.
Do things regularly to improve the work place. Happy staff = happy customers.
Be sure your employees are aware of your experiences. Clear service guidelines and knowledge of the company’s mission are necessary.
Conclusion
In conclusion remarks I would like to say something that A. Matin &Co. is the profitable organization. A. Matin &Co. has played very vital role in his field by providing attractive service and packages to the customers. A Matin &Co. has very wide network converge in national with latest technology and provide service to its valued customers. I have done internship in A. Matin &Co. for a period of three month and this period is quiet a small period of time yet I have learn a lot. Here I apply my knowledge and get a technical practice of my knowledge. Now I know about the environment of organization and how to communicate with, colleague and boss. I learn that how to use theoretical knowledge in organization. My communicate skills are improve. My decision making power is improve. Now I have a power to deicide about future. A. Matin &Co. is a customer oriented and as well as employee oriented company so it provides a very friendly environment for the employee. Any internee has a good chance of learning new things.
Field Survey A.Matin & co.
Institute of Chartered Accountants of Bangladesh (ICAB)
List of Bangladesh Accounting Standards/Bangladesh Financial Reporting Standards.
By the web site ofwww.icab.org.bd