Accountancy Profession in Bangladesh

Topics: Accountant, Chartered Accountant, Accountancy Pages: 48 (9605 words) Published: May 10, 2011

Accountancy is the art of communicating financial information about a business entity to users such as shareholders and managers. The communication is generally in the financial´s form statements that show in money terms the economic resources under the control of management; the art lies in selecting the information that is relevant to the user and is reliable. Accountancy is a branch of mathematical science that is useful in discovering the causes of success and failure in business. The principles of accountancy are applied to business entities in three divisions of practical art, named accounting, bookkeeping, and auditing.

Accountancy profession in Bangladesh:

ACCOUNTANCY is a critical component of a market economy's infrastructure and economically sound activity would be impossible without it. Accountancy not only provides information on the financial position of operations but is also the foundation of a country's fiscal system playing a vital role in corporate governance. It enforces prudential requirements for banks, insurance companies, securities dealers, and other market participants. As a result, the accounting sector is among the most regulated in the world's advanced economies in terms of its liabilities towards the society.

In Bangladesh the Institute of Chartered Accountants (ICAB) was founded in 1972 with only 80 members. As of 2010, the number has grown to 1,200, out of which 270 are in practice and the remainder are either serving for the Government, public enterprises, NGOs and donor organizations and different corporate houses.

The first initiative of developing a Professional Accountancy body came from Scotland. A group of accountants obtained recognition of the Royal Charter for their body in 1854. Following this, the English Institute obtained theirs in 1880. Gradually professional bodies for accountants started forming across countries. Kettle (1958) reported that from the late 19th century British accounting firms started establishing offices in other countries. Deloitte, Deve, Griffiths and Co., opened offices in 17 foreign cities during 1890-1914. With the start of the British industrialization, the UK became the birthplace of the accounting profession. The British assisted the Americans with capital to shift to an industrial economy. British auditors accompanied the investors to provide reliable financial information, as there was no organized American accounting body. The British auditors started organizing the accounting profession and training the Americans. The US accounting profession gradually grew under the leadership of British Accountants (Carey, 1970, pp. 53-58). Finally the American Association of Public Accountants was founded in 1887 with its first President being a Briton (Samuels and Piper, 1985, p.20). Gradually the emergence of such professional bodies in developing countries representing nationally qualified accountants grew in number and they began competing with those having foreign qualifications.

Overview of influence over accounting: Accountancy Profession in Bangladesh has been transplanted through British auditors accompanying investors during colonization. Soon afterwards branches of British affiliated accounting societies were established in India and Burma in 1932, and Bengal in 1933 {Johnson and Caygill (1971)}. Setting up of the East India Company in Surat during 1608 is considered having significant influence over the development of British accounting methods throughout the Indian subcontinent. Therefore, East India Company's rule in Bengal from 1757-1857 and then direct British rule up to 1947 has significantly influenced the accounting and reporting of this region.

Moreover, the commercial code, education, training, along with business education and professional training of accountants was highly influenced with the establishment of UK accounting societies such as Briston (1978) and Johnson & Caygill (1971). Since the World War...
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