Adoption of International Financial Reporting

Standards in Bangladesh: Benefits and Challenges

Abstract :

The study focuses on the recent adoption status of International Financial Reporting Standards (IFRS) in a

developing economy like Bangladesh. The objectives of this paper are to identify the development of the

accounting profession in Bangladesh, the legal and regulatory framework of accounting, IFRS adoption

process, benefits and challenges of adopting IFRS in Bangladesh. The study is purely based on the

information from prior works of literature and secondary data sources. IFRS adoption promises a lot of

benefits like decreased cost of capital, improved financial reporting quality, increased ability to secure

borders-listing, better Access to Global Capital Markets and attraction of foreign direct investment, etc.

Some challenges also exist like the development of a legal and regulatory framework, low audit fees,

awareness campaign and training of personnel etc. which must be overcome for successful adoption of

IAS/IFRS. The paper also argues that the Financial Reporting Council (FRC), as proposed Financial

Reporting Act 2015 (FRA) should not be handled by non-experts body. This paper strongly recommends

that the ICAB council may be reformed consisting of Three Board - (i) Accounting Standard Board, (ii)

Auditing Standard Board and (iii) Financial Reports Review Board to ensure compliance of international

standard and effective implementation.

Keyword -: International Financial Reporting Standards, Adoption, benefits and challenges, ICAB,

Bangladesh.

I. Introduction

International Accounting Standards Board (IASB) based in London, England, was established in April

2001 as the successor to the International Accounting Standards Committee (IASC). It is the

responsibility of the IASB for developing and implementing International Financial Reporting Standards

(the new name of International Accounting Standards (IAS) issued after 2001) by its member countries

around the world. Adoption of IFRS has received much attention in the professional and academic

literature of the developed, emerging, developing and underdeveloped countries universal. International

Financial Reporting Standards (IFRS) refer to a widespread, high-quality set of accounting standards and

interpretations used in the preparation of financial statements. IFRS are considered a principles-based set

of standards in that they set up broad rules with greater importance on interpretation and the use of

judgment, rather than reliance on specific bright-lines. (Tomaszewski & Showerman, 2009). Due to

growing international business among countries, there is strong support in favor of IFRS. IFRS is a well-

structured set of accounting standards which will increase transparency, understandably and promote

global acceptance on financial reporting (Edwards, 2009). Accounting is considered as the language of

business. Since business entities are highly globalized, it is essential that they speak one language

globally. The adoption of uniform standards cut the costs of doing business across borders by reducing

the requirement for complementary information. They formulate information more comparable, thereby

enhancing evaluation and analysis by users of financial statements (Adekoye, 2011). The study carried

out by Esptein (2009) highlighted that universal financial reporting standards will raise market liquidity,

reduce transaction costs for investors, lower cost of capital and facilitate international capital formation

and flows. Whereas there are more arguments that IFRS is unsuited to developing countries, although

they are adopting it because IFRS is an outcome with network effects (Odia & Ogeido, 2013). Further,
there was the need to be a focus for capital from investors, creditors and financial institutions both locally

and externally, for extension of businesses and also setup new ones. It gives birth to the need of a global

set of accounting standards. Before the harmonization of International Financial Reporting Standards,

different countries developed their individual countrywide accounting standards or adopted that of other

countries. Fosbre, Kraft & Fosbre (2009) stated this when they indicated that there was a movement of

business toward a global economy and have accelerated the need to move toward global accounting

standards.

The Institute of Chartered Accountants of Bangladesh (ICAB), which is a supreme body for the

development of accounting profession in Bangladesh, has been functioning for the adoption and

improvement of accounting standards. The ICAB has a program to adopt IAS as Bangladesh Accounting

Standards (BAS). It is Electronic copy available at: http://ssrn.com/abstract=2638845 Adoption of

International Financial Reporting Standards in Bangladesh: Benefits and Challenges DOI:

also mentioned that, most of these carbon copies of original IASs. While processing has been done than Security
Exchange Commission of Bangladesh (SEC) hold the responsibilities and became delegated of Government of
Bangladesh to keep an eye on compliance all those standards by listed company in Bangladesh (Mir & Rahman,
2005). This study concentrates on the process of adopting the IFRS in Bangladesh as a developing economy.
Specifically, the study examined the development of the accounting profession in Bangladesh, the legal and
regulatory framework of accounting, IFRS adoption process, benefits, and challenges of IFRS adoption. Finally,
conclusions are drawn and the recommendation made. The study suffers from some limitations also. The issues
raised in the paper are drawn mainly from prior works of literature and secondary sources, i.e., research papers,
articles, working paper and different books etc. The study is qualitative in nature. It is, therefore, difficult to examine
the issues through quantitative tools. It is mentionable that the IFRS implementation procedure is yet to be
completed in Bangladesh. The paper, therefore, does not deliberate the post-IFRS implementation impact on
corporate Bangladesh financial reporting system.
II. Objectives of the Study

The objectives of the research are to:

i. portray the process of adopting the IFRS in Bangladesh as a developing economy.
ii. identify the development of the accounting profession in Bangladesh, the legal and regulatory framework of
accounting.
iii. present the benefits as well as challenges of IFRS adoption and
iv. present some policy recommendations for adoption and implementation of IFRS for ensuring good financial
reporting.

III. Literature Review

There are a number of studies that have examined the various aspects of IFRS adoption and implementation in
developing countries. IFRS are standards and interpretations adopted by the International Accounting Standards
Board (IASB). The research constitutes an extension of the study conducted by Jacob and Madu (2009) recognized
IFRS as a single set of high-quality, globally accepted accounting standards that can enhance comparability of
financial reporting across the globe. This increased comparability of financial information could result in better
investment decisions and ensure a more optimal allocation of resources across the global economy. Cai and Wong
(2010) added that a single set of accounting standards with global acceptance will annihilate the need to reaffirm
financial statements and also ensure accounting diversity across countries. In this manner, a greater integration of
global financial markets and cross-border movement of capital will be enhanced. Furthermore, Sunder (2010)
proposes six bases for decision as: involvement to wealth and prosperity of society, inclusion of pertinent
information from all parts of the economy, stability over time, and adaptability to changes in economic environment,
strength against manipulations, and confrontation to capture by narrow interest groups. Several scholars have
established that adoptions of IFRS at country level has increased direct foreign investment (Irvine & Lucas, 2006),
high Level of global market integration and develop quality accounting indicators (Chai, Tang, Jiang, & Lin, 2010).
Additionally, adoption of IFRS at the firm Level has improved accounting quality (Meeks & Swann, 2009; Barth,
2008) and financial performance (Latridis, 2010). The study conducted by Bhattacharjee and Islam (2009)
mentioned that ensuring disclosure quality of financial information is mandatory for reducing information
asymmetry and solving agency problem in the corporate sector. It has been discovered in the existing pieces of
literature that there are considerable improvements in accounting quality following IFRS adoption (Barth et al.,
2008; Barth et al., 2006; Gassen & Sellhorn, 2006; Hung & Subramanyam, 2007). Chamisa (2000) have examined
the international standards’ role in improving the quality of financial information twisted for a stock market in the
developing countries. He distinguished that these standards are critically and crucially important for the developing
countries with an active financial and capital market and are devoid of such significance regarding the other
developing countries. Moreover, on examining the development of accounting regulations in Jordan, Al-Akra et al.
(2009) have analyzed the impact of economic, political, legal and cultural factors on promoting the accounting
practices. They come to an end that the political and economic factors are the elements which contribute most to this
development.
IFRS is such accounting standards which have led to eliminating the global accounting differences and standardizing
reporting formats, IFRS eliminate many of the adjustments that analysts historically have made in order to make
companies’ financial information more comparable internationally. IFRS adoption, therefore, could make it less
costly for investors to compare firms across markets and countries (e.g., Armstrong et al., 2010; Covrig, Defond, &
Hung, 2007). Thus, a common set of accounting standards would reduce information Adoption of International
Financial Reporting Standards in Bangladesh: Benefits and Challenges DOI: 10.9790/487X-17811624
www.iosrjournals.org 18 | Page
asymmetries among investors and lower estimation risk by increasing comparability between lower and higher
quality firms. The gain would be greatest for institutions that create large, standardized-format financial databases.
Similarly, accounting diversity could be an impediment to cross-border investment (Bradshw, Bushee, & Miller,
2004). Thus, reducing international differences in accounting standards assists to some degree in facilitating
international integration of capital markets (Covrig, Defond, & Hung, 2007) by removing barriers to cross-border
acquisitions and divestitures, which in theory will reward investors with increased takeover premiums. Although
many countries have faced challenges in their decisions to adopt IFRS, its widespread adoption has been promoted
by the argument that the benefits outweigh the costs (Iyoha & Faboyede, 2011). This research constitutes an
extension of the study conducted by Alp and Ustandag (2009) reported that the development process of financial
reporting standards around the world and its practical results in developing countries had posed several challenges.
Such challenges include the complex structure of the international standards, potential knowledge shortfall and other
difficulties in the application and enforcement issues. There are arguments that IFRS are inappropriate in developing
and emerging economies. Emerging economies, in pursuing the global financial advantages offered by the adoption
of IFRS, face challenges in adapting their regulatory infrastructure and culture to western oriented accounting
standards (Irvine & Lucas, 2006; Zhang et al., 2007). Michas (2010) highlights that, in emerging market countries,
there are often deficiencies in the accounting and auditing practices. As evident from the literature review, a good
number of studies carried out in different countries have highlighted the benefits of having a single set of financial
reporting standards across the globe. Few of the studies have also brought out the procedural aspects of the
implementation of IFRS. Some of the studies have given a contradictory view wherein the articles talk about the
difficulties and complications faced in implementing IFRS.
3.1 Development of Accounting Profession in Bangladesh: Brief Overview

In Bangladesh, the profession of accountancy developed during the British colonial period. Today, the Institute of
Chartered Accountants of Bangladesh (ICAB) and the Institute of Cost and Management Accountants of Bangladesh
(ICMAB) are two professional bodies which guide the accounting profession in Bangladesh. Chartered Accountants
complete their training in practicing firms and specialize in financial accounting, financial audit and tax. Chartered
Management Accountant (CMA) receives 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.
3.2 Institutional Legal Regulatory Frameworks in Bangladesh

The legal, Regulatory Framework for Financial Reporting and Audit of Corporate Entities in Bangladesh are
governed by the Companies Act 1994 and Securities Exchange Rules 1987. The professional responsibilities and
conduct of Chartered Accountants are governed by the Bangladesh Chartered Accountants Bye-laws 1973. The
Companies Act 1994 does not hold any provision for the compulsory observance of the adopted IAS in practice. The
Chartered Accountants Bye-laws 1973 have also not been amended to entail compulsory compliance of the adopted
standards by ICAB members. Hence in the absence of any broad statutory or professional requirements, the
implementation of the adopted IAS/IFRS is regarded as pinpointing of good, standard accounting practices. Despite
the adoption of IAS by ICAB, there was no legal enforceability of these standards till the end of 1997. The SER
1987 were amended in 1997, whereby all listed entities are required to comply mandatorily with the requirements of
all applicable IAS/IFRS, (as adopted by ICAB), in the preparation and presentation of their Financial Statement
(FS); and all audit practices are required to ensure compliance with relevant ISA, (as adopted by the ICAB), in the
conduct of and reporting on the audit of FS of listed entities. Hence the IAS and ISA duly adopted by the ICAB as
the BAS and BSA, now have a legally enforceable mandatory implementation status for all listed companies in
Bangladesh (Chowdhury, 2012).
IV. According to IFRS, financial statements consist of the
Statement of financial position,
Statement of comprehensive income,
Cash flow statement, a statement of changes in equity, and
Explanatory notes. Note disclosures must include:
Adoption of International Financial Reporting Standards in Bangladesh: Benefits and Challenges DOI:
10.9790/487X-17811624 www.iosrjournals.org 19 | Page
 Accounting policies followed
 Judgments made by management in applying critical accounting policies
 Key assumptions about the future and other important sources of estimation uncertainty.

V. Methodology

This study is qualitative in nature and do not use any quantitative tool to analyze the data. It is conducted on the
basis of the prior literatures and secondary information. There are various research papers, articles, working paper
and different books have been used for the study. Also the personal interview with some qualified accountants has
been conducted.
VI. IAS/IFRS adoption in Bangladesh

The institutional actors involved in the adoption of IASs in Bangladesh include the Government of Bangladesh, the
World Bank, Asian Development Bank (ADB) and the Institute of Chartered Accountants of Bangladesh (ICAB).
The IASs adoption process was initiated in August 1999 following a US $ 200,000 World Bank grant to the
Bangladeshi Government for the development of Accounting and Auditing Standards in Bangladesh (Mir &
Rahaman, 2005). The World Bank’s Institutional Development Fund (IDF) grant was targeted at enhancing the
institutional capacity of the ICAB for the adoption of IASs in the country. On its part, the ICAB was required to
provide the additional US $ 20,000 required to help accomplish this task. The Government then delegated the
process to the Securities and Exchange Commission (SEC) as the main institution responsible for overseeing the
process (Mir & Rahaman, 2005). ICAB is responsible for adopting and implementing International Financial
Reporting Standards in Bangladesh and adopted IFRS as Bangladesh Reporting Financial Standards. ICAB has been
performing the convergence process of IFRS. It also updates those standards as an ongoing process to enhance
comparability and credibility of audited financial information. In the adoption process, an IAS/IFRS is first
considered by the Technical and Research Committee (TRC) of the Council ICAB. Thereafter it is critically
reviewed by a nominated sub-committee comprising of one or two members who would undertake a stringent
vetting exercise to ensure elimination of any anomalies or inconsistencies and ensure conformity with the
requirement of the existing legal regulatory requirements. Based on the recommendations of the Sub-committee and
taking into consideration necessary modifications, the TRC then formulates its recommendation to the Council for
adoption. Once approved by the Council, it becomes a definitively adopted Bangladesh Financial Reporting
Standards (BFRS) (Chowdhury, 2012). As indicated in Appendix I (A & B), the IASC had issued 41 IAS of which
29 are presently applicable (after necessary reformatting/revising/supersession and withdrawal). With the exception
of IAS 29 on Hyperinflation, the ICAB has adopted all the other 28 IAS extent as BAS. ICAB has adopted 12 out of
13 IFRS issued to date by IASB as BFRS. It has also adopted IFRS for SMEs as Bangladesh Financial Reporting
Standard BFRS for SMEs, with an effective date on or after Jan 2013.BFRS for SMEs includes all modules except
section 31: Financial Reporting in Hyperinflationary Economies. Although the IFRS for SMEs has been adopted by
ICAB and made available in Bangladesh, but application and implementation of such standards may not be
enforceable, as there are no obligations from any regulatory authority that has jurisdiction over SMEs. The Cabinet
of Bangladesh Government approved the Financial Reporting Act- 2013 on 19th August, 2013 to set up FRC
(Financial Reporting Council) for strengthening the monitoring of accounting standards and the accountancy
profession (Khan, 2013). The Institute of Chartered Accountants of Bangladesh (ICAB) has agreed to accept the
proposed Financial Reporting Act (FRA), under which Financial Reporting Council (FRC) will be formed to
oversee functions of the auditors. The institute, however, placed a five-point demand before the government for its
consideration in finalizing the proposed FRA as it, ICAB said, will help shun various impediments in ensuring
quality audit and achieve purposes of the law. The council is comprised of 1) governor of Bangladesh Bank, 2)
chairman of Bangladesh Securities and Exchange Commission (BSEC), 3) chairman of Insurance Development and
Regulatory Authority (IDRA), 4) chairman of National Board of Revenue (NBR), 5) president of ICAB, 6) president
of ICMAB, 7) three representatives from the finance and commerce ministries, 8) two experts in accounting and
audit other than members from ICAB and ICMAB, 9) the CEO who will be member secretary to FRC.
VII. Benefits of Adopting IAS/IFRS

Adoption of IFRS is believed to lead to an increase in transparency, comparability and quality of financial reporting,
thereby, benefitting investors. Standards application of IAS/IFRS thereby benefits users and issuers by giving them
access to a larger pool of foreign capital at a lower cost.
Researchers have given various opinions on the benefits of adoption of IFRSs across the globe as a single set of
Reporting Standards. Benefits include that the adoption of IFRS decreased cost of capital (Leuz & Verrecchiia,
2000; Daske, Hail, Leuz &Verdi, 2008), efficiency of capital allocation (Bushman & Piotroski, Adoption of
International Financial Reporting Standards in Bangladesh: Benefits and Challenges DOI: 10.9790/487X-
17811624 www.iosrjournals.org 20 | Page
2006), easier international capital mobility (Okundi, 2013; Young & Guenther, 2008),capital market development
(Ahmed, 2011),improved and higher market liquidity and value (Adekoya, 2011), enhanced comparability
(Okere,2009), cross border movement of capital, (Bhattacharjee & Hossain 2010) and improved transparency of
results (Essien-Akpan, 2011; Mike,2009). A research conducted by Gordon (2008) listed the benefits from adoption
of IFRS over the world as :(i) Better financial information for shareholders;(ii) better financial information for
regulators; (iii) enhanced comparability; (iv) improved transparency of results; (v) increased ability to secure cross
-border listing; (vi) better management of global operations; and (vii) decreased cost of capital. Jain (2011) point out
the benefits from adoption as: (i) Better Access to Global Capital Markets; (ii) Easier Global Comparability; (iii)
Easy Cross-Border Listing; (iv) Better Quality of Financial Reporting; and (v) Elimination of Multiple Reporting.
Bhattacharjee and Islam (2009) highlighted the vulnerability of small investors which has been a long time
established problem and has been a big impediment for the stock market development in Bangladesh. IFRS adoption
which improves financial reporting quality helps the small investors to compete better with informed professionals
and hence reduces their trading risk. The benefit is that the companies who had no obligation to follow IFRS and
who are SMEs, they have now a full set of globally compatible standard to follow. It will ultimately help the SMEs
who want to prepare and present their Financial Statements that are acceptable nationally and globally. Jermakowicz
(2004) concluded that the adoption of IFRS will increase comparability of consolidated accounts and levels of
transparency form any companies, e.g. through expanded segment disclosures, reporting unfunded pension
obligations and the recognition of derivatives on balance sheets at fair value. IFRS can lead to improved
comparability across borders and within global industries, with worldwide peers and competitors. A more specific
consideration may reveal individual benefits as hereunder:
International Investors
• Easier access to foreign capital funding and cross-border stock exchange listings – the need to attract

international investors and to enable easy monitoring of overseas investments.

Multi-national Companies
• Gaining better access to foreign investor funds.
• Improved management control from harmonized internal financial communication.
• Facilitating of appraisal of foreign for purposes of takeovers and mergers.
• Ensuring easy compliance with reporting requirements of overseas stock exchanges.
• Facilitating of consolidation of foreign subsidiaries and associated companies.
• Achieving the reduction in audit costs.
• Enhancing transferability/mobility of accounting staff across national borders.
• Facilitating determination of tax assessments regarding foreign income.

Governments and National standard setting bodies

• Assist governments in attracting international investors as adoption of IFRS enables international investors easy
monitoring of overseas investments.

Local and domestic companies

• Improved comparability of reported financial information by entities – owing to improved transparency and

enhanced disclosures and seal of quality.

• Optimization of tax planning – the ability to analyze impact on tax-related issues.
• Ability to understand interaction with strategic initiatives to generate value from synergies –this also facilitates
more effective management of enterprises and efficient processes since IFRS reporting is performance based.
• Easier access to external capital.

The above benefits are perceived benefits of adoption of IFRS. Researchers are yet to be carried out to understand
actual benefits of adoption of IFRS.
VIII. Challenges of IFRS Adoption

These challenges have been supported by previous studies conducted by researchers. Challenges include that the
adoption of IFRS potential knowledge shortfall (Alp & Ustundag, 2009), high demand for education and training
(Irvine & Lucas, 2006), legal system effect (Li & Meeks, 2006), tax system effect (Shleifer & Vishny, 2003),
development of a legal and regulatory framework (Madawaki, 2012), enforcement, and compliance mechanism
(Martins, 2011). Adoption of International Financial Reporting Standards in Bangladesh: Benefits and
Challenges DOI: 10.9790/487X-17811624 www.iosrjournals.org 21 | Page
There are a lot of technical Challenges faced by the users while adopting IFRSs. A lot of conflicts with local GAAP,
especially in developing countries, with IFRSs were observed. The concepts of “present value” and “fair value”
have complexities with IFRS. In IFRS framework, treatments of expenses like premium payable on redemption of
debentures, discount allowed on debentures, underwriting commissions paid, etc is different from generally accepted
method. This would lead to a change in the income statement and would bring about confusion and complexities.
IFRS accounting concepts do conflicts with local GAAP concepts and sometimes work as a limit to the adoption of
IFRS. For example, IFRS does not permit to use of LIFO as an inventory valuation method. The alteration from
LIFO to FIFO or weighted average cost, both accepted IFRS methods of inventory valuation, typically results in
higher ending inventory balances, lower cost of goods sold and higher earnings per share (EPS) in a rising cost
environment. Adoption is IFRS would mean that financial statement users would need to adapt to the new method of
inventory valuation, and its impact on earnings, cash flow, assets and equity. The further challenges are discussed as
follow
Adoption of IFRS means a complete set of different reporting standards has to bring in. The awareness of these
reporting standards is still not there among the stakeholders like Firms, Banks, Stock Exchanges, Commodity
Exchanges etc.. To bring a full awareness of these standards among these parties is a complex task.
Low level of awareness and inadequate availability of quality training. Moreover training materials on IFRS are
scarce, particularly in languages other than English. Furthermore, proper application of certain measurement
requirements in IFRS requires input from competent professionals in other areas such as actuary, property valuation,
and others. Lack of technical capacity poses a significant barrier to the successful implementation of IFRS.
Knowledge gap among professionals, regulators & preparers.
Implementation of standards entails incremental costs to reporting entities in ensuring compliance with IAS
through the employment of appropriately eligible personnel for the preparation of Financial Statements.
Standards are often inflexible and may tend to stifle independent judgment and prohibit local accounting in
dealing conditions which may be peculiar to a particular entity This may have an unfavorable outcome on
professional development, restricting accountants and auditors to checking compliance with rules and disclosures.
There is often significant inconsistency in disclosure levels across various parts of annual reports.
The level of disclosure, often in the notes, has increased greatly over the last couple of decades. Measurement
aspects covered by accounting standards of assets & liabilities or of profit & loss are often complex and may be
controversial, thus affecting reported results.
Corporate financial reporting is often non-compliant with the compulsory disclosure requirements as per Acts,
rules & regulations and applicable IAS/IFRS by listed entities are not often reported by concerned auditors.
Inadequate evaluation and monitoring of corporate report by Security Exchange Commission (SEC) and Stock
Exchanges.
There is a lack of appropriate monitoring for implementation of the adopted standards by existing regulatory
frameworks. Non-compliance with the requirements of a particular standard is often not reported and disciplinary
action is rarely instituted.
By any standard, the audit fees in Bangladesh are very low compared to the responsibilities involved and the
time and efforts required doing a proper audit job. This obviously affects the approach and work of the Auditor.
There is a lack of resources of ICAB to enable and to monitor effective financial reporting standard, ensuring
Quality Assurance.
There is often a contradiction between financial reporting and tax accounting can be challenging. Different
countries have dealt with this in different ways: in some, tax requirements are linked to the same financial
statements, while in others the commencement of IFRS has resulted in a division of tax rules from accounting
standards.

IX. Conclusion

With the development of science, technology and the fast growth of multinational entities, cross-border investments
and the globalization of business activities in latest years have had a significant impact on the nature and quality of
financial reporting. IFRSs bring in standardization and comparability of the financial statements which is prepared
in different countries, it obviously helps the investors to understand and interpret the financial statements prepared
by different companies or countries. The adoption and implementation of IAS/IFRS as a vehicle for financial
reporting are progressively expanding with a wider focus on transparency Adoption of International Financial
Reporting Standards in Bangladesh: Benefits and Challenges DOI: 10.9790/487X-17811624
www.iosrjournals.org 22 | Page
and a variety of disclosures. The Government, business community, regulatory agencies and particularly the regional
professional bodies, are expected to play a more proactive role in this respect. The proposed financial reporting act
is not a good structure to give an intended result which is simply an attempt to tighten the mouth of bottle keeping a
lot of leaks on it. We must ensure proper corporate governance, internal control, reporting framework etc. to get
proper accounting ground. Moreover, the proposed Financial Reporting Council would be a traditional non-
professional council rather than a result oriented professional institution. These are highly technical issues and
cannot be handled by non-experts body like the proposed FRC and we believe that a political led non-professional
council can never bring financial reporting transparency unless ICAB can work with full independence to enrich the
profession. This paper strongly recommends that the ICAB council may be reformed consisting of 3(three) Board -
(i) Accounting Standard Board (ii) Auditing Standard Board and (iii) Financial Reports Review Board to ensure
compliance of international standard and effective implementation. The first two boards will consist of equal
number of ICAB and ICMAB members to analyze and adopt standards in a professional manner and the last review
board may be consisted of ICAB, ICMAB, Bangladesh Securities and Exchange Commission, Bangladesh Bank and
other regulators with a chairman of civil society or professor having experience in accounting, finance and
economics to ensure the review of financial report and oversight of professional integrity of accounting professional
upon Suo Moto basis or submission of any review petition by the regulators to the Board. To implement:
The professional accountancy bodies should support their ongoing professional education requirements with
ICAB guidelines and constantly develop awareness among their members as well as non-members for easy
understanding, interpretation and application of the adopted IAS/IFRS through relevant continuous research, follow
up, problems shooting, news and views on the development of IFRS, its importance, need to be well circulated and
published in the local bulletins, newspapers, journals, electronic medias and regular holding of conferences,
seminars and workshops.
The government should establish an independent body to set monitor and administer accounting and auditing.
The proposed body should be empowered to monitor and enforce accounting and auditing focusing on technically
qualified personnel, practical training of inspectors, administrative support and necessary logistics arrangements.
Both SEC and ICAB should play an active role in confirming quality assurance through adequate monitoring and
ensuring effective compliance of the provisions of law, financial reporting, and auditing standards.
Awareness and appropriate training should contribute to the process of adopting new language. ICAB should
carry on relevant training & knowledge sharing with Office of the Comptroller and Auditor General, Bangladesh
Bank, National Board of Revenue, Govt. Ministries and other concerned regulatory agencies.
The regulatory agencies should be adequately made stronger through engagement of qualified professionals to
ensure proper compliance and monitoring of the implementation of adopted IAS/IFRS for financial reporting and
corporate governance practices.
Professionals should be dynamically involved as relevant experts in formulating national economic policies and
instruments pertaining to such areas as legislative framework changes, privatization of State owned Enterprises
(SOEs), banking sector and financial reforms, capital market development, etc.
Recent changes in the legal regulatory framework now require mandatory compliance with all ICAB adopted
IAS/IFRS by listed and not limited companies.
In IFRS and other nations reporting requirements, the differences between fair value and carrying value need to
resolve in the measurement of most financial statements.
ICAB should strengthen its professional learning partnership with Institute of Chartered Accountants in England
and Wales.

X. References
[1]. Tomaszewski, G. S., and Showerman, S, IFRS in the United States: Challenges and Opportunities, Review of Business, vol. 30 (2),2010, pp.
59-71
[2]. Edwards, J. R, Financial Accounting (London: Institute of Chartered Secretaries and Administrators, 2009).
[3]. Adekoya, O, Similarities and Differences, IFRS and Nigerian GAAP (Lagos: Pricewater House Coopers International Limited, 2011)
[4]. Epstein, B. J, The economic effects of IFRS adoption. The CPA Journal, 2009, pp. 26-31.
[5]. Odia, J.O. & Ogeido, K. O, IFRS Adoption: Issues, Challenges and Lessons for Nigeria and other Adopters, Mediterranean Journal of Social
Sciences, 4(3), 2013, pp. 389-399.
[6]. Fosbre, A. B., Kraft & Fosbre, The Globalization of Accounting Standards: IFRS versus US GAAP. Global Journal of Business Research,
3(1), 2009, pp. 61-71
[7]. Mir, M. Z., and Rahaman, A. S, The adoption of international accounting standards in Bangladesh. Emerald journal article, 18(6), 2005, pp.
816-841.
[8]. Jacob, R. A., & Madu, C. N, International Financial Reporting Standards: an indicator of high quality, International Journal of Quality &
Reliability Management, 26, 2009, pp. 712-722.
Adoption of International Financial Reporting Standards in Bangladesh: Benefits and Challenges DOI:
10.9790/487X-17811624 www.iosrjournals.org 23 | Page
[9]. Cai, F., & Wong, H, The Effects of IFRS adoption on global capital market integration, International Business & Economic Research
Journal, 9(10), 2010, pp. 25-34.
[10]. Sunder, S, IFRS Monopoly: The Pied Piper of Financial Reporting ,being paper prepared for information for better markets conference
ICAEW ,London December 20-21, 2010
[11]. Irvine, H. J., & Lucas, N, The rationale and impact of the adoption of International financial reporting standards on developing nations: the
case of the United Arab Emirates. In Proceedings 18th Asian-Pacific Conference on International Accounting Issues, 2006, pages pp. 1-22, Maui,
Hawaii.
[12]. Chai, H., Tang, Q., Jiang, Y., & Lin, Z, The Role of International Financial Reporting Standards in Accounting Quality, Evidence from the
European Union., Journal of International Financial Management and Accounting, 21(3), pp. 220–278.
[13]. Meeks, G., & Swann, P, Accounting Standards and the Economics of Standards, Accounting and Business Research , 39,(3), 2009, pp. 191-
210.
[14]. Barth, M, Global financial reporting: Implications for US academics. The Accounting Review, 83, 2008, pp. 1159-1179
[15]. Latridis, G, IFRS adoption and financial statement effects: The UK case, International Research Journal of Finance and Economics, 38,
2010, 165-172.
[16]. Bhattacharjee, S & Islam, M. Z, Problems of adoption and application of international financial reporting Standards (IFRS) in Bangladesh,
International Journal of Business and Management, December. 4(12), 2009, pp. 165-175
[17]. Barth, M. E., Landsman W. R., Lang, M. H., & Williams, C. D, Accounting quality: International accounting standards and US GAAP,
2008.
[18]. Barth, M., Landsman, W., & Lang, M, International accounting standards and accounting quality, Working Paper, (Chapel Hill: Stanford
University and University of North Carolina, 2006)
[19]. Gassen, J.,& Sellhorn, T, Applying IFRS in Germany - determinants and consequences, 2006
[20]. Hung, M & Subramanyam, K, Financial statement effects of adopting international accounting standards: The Case of Germany. Review of
Accounting Studies, 12(4), 2007, pp. 623-657
[21]. Chamisa, E, The relevance and observance of the IASC standards in developing countries and the particular case of Zimbabwe, The
International Journal of Accounting, 35(2), 2000, pp. 267−286.
[22]. Al-Akra, M., Jahangir, A. M., & Marashdeh, O, Development of accounting regulation in Jordan, The International Journal of Accounting,
44, 2009, pp. 163–186.
[23]. Armstrong, C., Barth, M., Jagolinzer, A., Riedl, E. J, Market reaction to the adoption of IFRS in Europe. The Accounting Review, 85, 2010,
pp. 31–61.
[24]. Covrig, V., Defond, M., & Hung, M, Home Bias, Foreign Mutual Fund Holdings, and the Voluntary Adoption of International Accounting
Standards, Journal of Accounting Research, 45, 2007, pp. 41–70.
[25]. Bradshaw, M.; Bushee, B., & Miller, G, Accounting Choice, Home Bias, and U.S. Investment in Non-U.S. Firms. Journal of Accounting
Research, 42, 2004, pp. 795–841.
[26]. Iyoha, F.O & Faboyede, S.O, Adopting International Financial Reporting Standards (IFRS) ‐ A Focus on Nigeria. International Journal of
Research in Commerce and Management. 2(1), 2011, pp. 35-40.
[27]. Alp, A., & Ustuntag, S, Financial reporting transformation the experience of Turkey. Critical Perspective on Accounting, 20, 2009, pp. 680-
699.
[28]. Zhang, Y., Andrew, J. and Collier, H, The Convergence of IFRS in China: A view on the influence of political ideology on Chinese
accounting profession, Working paper, ACE, International Conference, 2007, Hong Kong, China.
[29]. Michas, P, Auditing in Emerging Market Countries: Does it Matter?, Working Paper, University of Missouri, 2010.
[30]. Chowdhury, A, Harmonization of Financial Reporting and Audit Practices – Bangladesh Perspective, The Bangladesh Accountant, July-
September, 2012, pp. 5-36.
[31]. Khan, S. A Critique on Accounting & Auditing Framework. Financial Express. September 30. 2013.
[32]. Leuz, C., & Verrecchiia, R. E, The economic consequences of increase disclosure, Journal of Accounting Research, 38, 2000, pp. 91-124.
[33]. Daske, H., Hail, L., Leuz, C. & Verdi R, Mandatory IFRS Reporting around the World: Early Evidence on the Economic Consequences,
Working paper, University of Chicago, Graduate School of Business, 2008.
[34]. Bushman, R., & J Piotroski, J, Financial reporting incentives for conservative accounting: The influence of legal and political institution,
Journal of Accounting and Economics, 42, 2006, pp. 107-148.
[35]. Okundi, B, Tax Implications of Implementing IFRSs ( Price water house Coopers, 2013)
[36]. Young, D., & Guenther, D. A, Financial reporting environments and international capital mobility, Journal of Accounting Research, 41,
2008, pp. 553–579.
[37]. Ahmed, A, Practical challenges of HRS implementation, “What Bank Regulators Need To Know” (IFRS International Conference Nigeria,
2011).
[38]. Okere, E, O, International Financial Reporting and Accounting Issues: Imperatives of Attainment of Economic Development in Nigeria,
ICAN 39 Annual Accountants Conference, 2009.
[39]. Bhattacharjee, S., & Hossain, M. S, Determinants of financial reporting outcomes following IFRS adoption-implications for Bangladesh,
The Bangladesh Accountant, 69(40), 2010, pp. 10-19.
[40]. Essien-Akpan, I, The International Financial Reporting Standards (IFRS). The Role of the Chartered Secretary and Administrator. A paper
presented at the 35th Conference of ICSAN (Lagos Sheraton Hotels and Towers, 2011).
[41]. Mike, M, Seminar Understanding IFRS. National GAAP vs. IFRS (Lagos, Nigeria, 2009).
[42]. Gordon, E.A, Sustainability in Global Financial Reporting and Innovation in Institutions, Accounting Research Journal, 21(3), 2008,
pp..231-238, 2008.
[43]. Jain, P, IFRS Implementation in India: Opportunities and Challenges, World Journal of Social Sciences 1(1), 2011, pp125-136.
[44]. Jermakowicz, E. K, Effects of adoption of international financial reporting standards in Belgium: The evidence from BEL-20 companies,
Accounting in Europe, 1, 2004, pp. 51–70.
[45]. Li, K., & Meeks, G, The Impairment of Purchased Goodwill: Effects on Market Value. Working paper. Institute of Chartered Accountants
in England and Wales. Centre for Business Performance, 2006.
[46]. Shleifer, A., & Vishny, R. W, Stock Market and Driven Acquisitions, Journal of Financial Economics, 70, 2003 pp. 295-311
[47]. Madawaki, A, Adoption of International Financial Reporting Standards in developing countries: The case of Nigeria. International Journal
of Business and management, 7(3), 2012, pp. 152-161.
[48]. Martins, V. W, Practical Challenges in IFRS Implementation. What Bank Regulators need to know? IFRS International Conference-
Nigeria, 2011.
Adoption of International Financial Reporting Standards in Bangladesh: Benefits and Challenges DOI:
10.9790/487X-17811624 www.iosrjournals.org 24 | Page
XI. Apendices

Appendix I (A) - Adoption Title of Adopted IAS as Effective Date- Applicable on or after
Status of International BAS
Accounting Standards (IAS) by
ICAB as Bangladesh
Accounting Standards (BAS)
IAS/ BAS
1 Presentation of Financial Statements 1 Jan 2007
2 Inventories 1 Jan 2007
7 Statement of Cash Flows 1 Jan 1999
8 Accounting Policies, Changes in 1 Jan 2007
Accounting Estimates and Errors
10 Events After the Reporting Period 1 Jan 1999
11 Construction Contracts 1 Jan 1999
12 Income Taxes 1 Jan 1999
16 Property, Plant and Equipment 1 Jan 2007
17 Leases 1 Jan 2007
18 Revenue 1 Jan 2007
19 Employee Benefits 1 Jan 2004
20 Accounting for Govet Grants and 1 Jan 1999
Disclosure of Govt. Assistance
21 The Effects of Changes in Foreign 1 Jan 2007
Exchange Rates
23 Borrowing Costs 1 Jan 2010

24 Related Party Disclosures 1 Jan 2007

26 Accounting and Reporting by Retirement 1 Jan 2007
Benefit Plans
27 Consolidated and Separate Financial 1 Jan 2010
Statements
28 Investments in Associates 1 Jan 2007
29 Financial Reporting in Hyperinflationary Not adopted
Economics
31 Interests in Joint Ventures 1 Jan 2007
32 Financial Instruments: Presentation 1 Jan 2010
33 Earnings per Share 1 Jan 2007
34 Interim Financial Reporting 1 Jan 1999
36 Impairment of Assets 1 Jan 2005
37 Provisions, Contingent Liabilities and 1 Jan 2007
Contingent Assets
38 Intangible Assets 1 Jan 2005
39 Financial Instruments: Recognition and 1 Jan 2010
Measurement
40 Investment Property 1 Jan 2007
41 Agriculture 1 Jan 2007