Accounting in Bangladesh
In Bangladesh, the profession of accountancy developed during the British colonial period. Today it is represented by two professional bodies, the Institute of Cost & Management Accountants of Bangladesh (ICMAB) and the Institute of Chartered Accountants of Bangladesh (ICAB).
Chartered Accountants complete their training in practicing firms and specialize in financial accounting, financial audit and tax. CMAs receive particular training in cost audit, management audit and management accounting, as well as general accounting and taxation. Both the ICMAB and ICAB are under the administrative control of the Ministry of Commerce. The Government of Bangladesh considers both type of professional accountants equal in respect of employment in government services.
The Generally Accepted Accounting Principles (GAAP) in Bangladesh is based upon standards set by the ICAB, which has stated its intention to adopt International Financial Reporting Standards. As of 2001, 23 such standards had already been adopted, and listed companies are required to use IFRS.
Different Branches of Accounting:
1.Financial accounting: Limits its activities in recording business transaction and determining financial results and position.
2. Cost Accounting: Takes the responsibility of determining cost of products and services and controlling costs with a view to maximizing profit.
3. Management Accounting: Takes the duty of helping management in planning and decision making.
Functions of different Branches of Accounting
Recording business transaction.
Determining the end results of the business.
Determining the financial position on the closing date of the accounting period.
Determining cost of product or services.
Controlling cost of product or services.
Supplying financial and cost data.
Assisting management in planning.
Assisting management in taking decisions in special situation.
Management accounting practise in Bangladesh companies
Management accounting practice helps an organization to survive in the competitive, ever-changing world, because it provides an important competitive advantage for an organization that guides managerial action, motivates behaviours, supports and creates the cultural values necessary to achieve an organization’s strategic objectives. Management accounting is concerned primarily with the internal needs of management. It is oriented toward evaluation of performance and development of estimates of the future as opposed to traditional financial accounting which emphasizes historical data related to such legal financial matters as ownership, investment, credit granting, taxation, regulation, and the building of foundations for consistent and conservative external reporting, “in accordance with generally accepted accounting principles.” Flexibility is an essential characteristic of management accounting since it presupposes that careful attention has been given to determine the important needs of management, many of which cannot be precisely identified in advance.
The Institute of Management Accountants (IMA), the professional association of practicing and academic management accountants, defines management accounting as:
“The process of identification, measurement, accumulation, analysis, preparation, interpretation, and communication of financial information used by management to plan, evaluate, and control within an organization and to assure appropriate use of and accountability for its resources. Management accounting also comprises the preparation of financial reports for non-management groups such as shareholders, creditors, regulatory agencies, and tax authorities.”
Management accounting provides information...
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