Every company registered under the Companies Act 1994 must have its financial statements audited annually by a practising chartered accountant. There is no small-company exemption - a dormant private limited company still requires audited accounts.
Why the Audit Matters Beyond Compliance
The audited financial statements are the document the company is judged by. They are attached to the corporate income tax return, filed with RJSC, submitted to banks for credit facilities, reviewed in investor due diligence and required for tender qualification. A qualified opinion follows a company for years.
Appointment of the Auditor
Auditors are appointed by the shareholders at the annual general meeting and hold office until the conclusion of the next AGM. The auditor must be a practising member of the Institute of Chartered Accountants of Bangladesh (ICAB) and independent of the company - which rules out the firm that maintains the books.
The DVC System
ICAB operates a Document Verification Code (DVC) mechanism. Every signed audit report carries a DVC that can be verified online, confirming the report genuinely originated from the signing chartered accountant. The NBR, RJSC and banks increasingly verify DVCs, which has largely closed off the market in fabricated audit reports.
Reporting Framework
Financial statements are prepared under IFRS as adopted in Bangladesh and audited under International Standards on Auditing as adopted by ICAB. The audit report addresses the true and fair view, the adequacy of books of account, and compliance with the disclosure requirements of the Companies Act.
What the Auditor Will Request
- Trial balance, general ledger and complete transaction listings
- Bank statements and reconciliations for every account
- Fixed asset register with additions, disposals and depreciation schedules
- Inventory count sheets and valuation basis
- Receivables and payables ageing with confirmations
- Loan agreements, lease contracts and major supply contracts
- VAT returns, withholding statements and treasury challans
- Board and shareholder meeting minutes
- Related party transaction schedules
- Management representation letter
Findings That Recur Year After Year
- Revenue recognised in the wrong period around year end
- Inventory valued without an adequate physical count
- Withholding tax not deducted, leading to disallowed expenses
- Related party transactions undisclosed
- Provision for gratuity omitted or unsupported by calculation
- Fixed assets on the register that no longer physically exist
Internal Audit Is a Different Function
Statutory audit gives an opinion to shareholders once a year. Internal audit reports to management continuously on control effectiveness, process compliance and fraud risk. Growing companies benefit from an outsourced internal audit function long before regulation requires one - it is usually where recoverable losses are first identified.
Preparing So the Audit Closes Cleanly
- Close the ledger and reconcile all bank accounts before fieldwork starts
- Perform a physical inventory count with the auditor present at year end
- Circulate receivable and payable confirmations early
- Assemble tax and VAT documentation in advance
- Have minute books written up and signed, not reconstructed later
How AeroNext Helps
AeroNext provides audit and assurance services - external statutory audit, internal audit, compliance audit and special purpose reviews - and audit readiness support for companies that want the year-end to be an event rather than a crisis.
