The Dhaka Stock Exchange (DSE) – the country’s premier bourse – has had its accounts audited by the same firm for 36 years, a practice that experts believe compromises standards and undermines the fundamental principles of auditing.
At a meeting on Thursday, the DSE board decided to appoint a new auditor after the bourse’s newly appointed Managing Director ATM Tariquzzaman raised concerns about the current arrangement, according to sources at the DSE.
The decision is slated to be finalised at the annual general meeting on 21 December.
According to information from DSE, A Qasem & Co Chartered Accountants, has been auditing the bourse for more than three and a half decades.
According to the Companies Act, there is a provision for appointing a firm to audit a company’s accounts. For listed companies, a specific auditor can serve for three consecutive years, but no such restriction exists for non-listed companies.
However, Financial Reporting Council Chairman Md Hamid Ullah Bhuiyan is of the opinion that, on ethical grounds, a company should not be audited by the same firm for an extended period.
“If the same auditor continues to serve a company for an extended period, a strong relationship is established. While this may lead to the detection of minor irregularities, there is a risk that they could be overlooked due to the close auditor-company relationship, thereby compromising the auditor’s independence,” he expressed concern.
When informed that DSE has been audited by the same firm for 36 years, he said, “How is this possible? This is malpractice. While there may be no legal bar, the issue is a matter of principle.”
He questioned why the issue did not come to the notice of the Bangladesh Securities and Exchange Commission (BSEC) or anyone.
According to DSE sources, in Thursday’s meeting, Managing Director ATM Tariquzzaman pointed out his observation regarding the auditor appointment.
He said A Qasem & Co has a long-standing association with DSE, which is against the fundamental principle of an auditor’s independence.