Abstract: In the absence of specific accounting and financial reporting standards and diverse interpretation of certain terms under the laws of the land, it has become a very difficult task to follow a standardized procedure in generation and presentation of accounting and financial information of NGOs. The practices followed by NGOs in Bangladesh are varied and diverse and there by preparation of financial statements are incomparable and difficult for uses to understand. The paper tries to demonstrate financial reporting and accounting system of a BRAC’s project and provide a guideline for constituting suitable financial reporting and accounting systems for NGOs. The article elaborates on basis of preparation of financial statements and reporting procedure and then followed by accounting systems of regional office and head office of that project. The final part of the article discuses issues relating to financial report and financial transparency of the project.
Munima Siddika, Lecturer, Faculty of Business and Economics, Daffodil International University, 102 Sukrabad, Mirpur Road, Dhaka-1207, Bangladesh.
Mohammad Sarwar Jahan Rekabder, Lecturer, Faculty of Business and Social Studies, State University of Bangladesh, 3
A.K.M. Delwar Hossain, Asst. Professor, Faculty of Business and Social Studies, State University of Bangladesh,
Keywords: BRAC, NGO, Accounting System, Financial Statements, Financial Report.
INTRODUCTION NGOs have become major players in the field of international and national development. Since the mid-1970s, the NGO sector in both developed and developing countries has experienced exponential growth. From 1990 to 2000 total development aid disbursed by international NGOs increased ten-fold. In 1992 international NGOs channeled over $7.6 billion of aid to developing countries. (Retrieved from: http://wbln0018.worldbank.org) on 25th February, 2006. Bangladesh has largely failed to assist the poor or reduce poverty because of limited resources and planning, while NGOs have grown dramatically, but it ostensibly fails to fill this gap. There are more and bigger NGOs here than in any other country of equivalent size. The Association of Development Agencies in Bangladesh (ADAB) had a total membership of 886 NGOs/PVDOs (Private Voluntary Development Organizations) in December 1997, of which 231 were central and 655 chapter (local) members (ADAB, 1998). The ADAB Directory lists 1007 NGOs, including 376 nonmember NGOs. The NGO Affairs Bureau of the Government of Bangladesh (GOB), which has to approve all foreign grants to NGOs working in Bangladesh, released grants worth about $250 million US dollars in FY 1996-97 to 1,132 NGOs, of which 997 are local and 135 are foreign (NGO Affairs Bureau, 1998). NGOs have mainly functioned to service the needs of the landless, usually assisted by foreign donor funding as a counterpoint to the state's efforts (Lewis, 1993). Besides all these advancement the field of NGO, Financial Reporting process and application of accounting is disgraceful. NGOs in Bangladesh have increasingly become subject to question and criticism from the government, political parties, intellectuals and the public in genus for misuse of funds, gender discrimination, and nepotism. Absence of proper guidelines in preparing financial statements and reports makes it more complex. The government of Bangladesh doesn’t have any unique rules for preparing the financial reports. BRAC is one of the largest NGOs in Bangladesh. It has more than hundreds projects. BRAC maintains books of accounts and other record on a program or project basis. And its reporting process is 67
transparent and one of the most structured system in...