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DO WE NEED SEPARATE ACCOUNTING

STANDARDS IN BANGLADESH?






Dr. Monirul Alam Hossain*
Associate Professor,
Department of Accounting
Rajshahi University
Rajshahi-6205
Bangladesh
Phone: (0721)750315 (Res.)
Fax: (00880721) 750 064 (Office)
E-mail: monirulhossain@yahoo.com








DO WE NEED SEPARATE ACCOUNTING
STANDARDS FOR BANGLADESH?

Accounting Standards are concerned with the system of measurement and disclosure rules to
produce a set of fairly presented financial statements and they appear with a set of authoritative
statements of how particular types of transactions, events and other costs should be recognised
and reported in financial statements (Chowdhury et. al., 1996). The IASC was formed in 1973 to
bring about harmonization in the accounting and reporting practices of individual countries. By
the end of 1991 more than 100 accounting bodies representing some 80 countries had become
members of the IASC. It has so far issued 41 IASs covering most important accounting issues.
Cyprus and Zimbabwe adopt international accounting standards (IASs) after reviewing process
as national accounting standards, whereas Pakistan, Malaysia, Malawi and Trinidad and Tobago
adopt IASs without any modifications (Wallace, 1990). In 1983, ICAB became the member of
the International Accounting Standard Committee (IASC). The ICAB through their Technical
and Research Committee have adopted fourteen International Accounting Standards (IASs) as
national accounting standards and several IASs are in process of adaptation. The Securities and
Exchange Commission has by a notification dated 29the December 1997 requires all listed
companies to abide by Accounting Standards adopted by the ICAB and hence, accounting
standards are mandatory only for the companies listed in the Dhaka Stock Exchange (DSE) and
the Chittagong Stock Exchange (CSE). In Bangladesh we can expect that at least the listed
companies are complying the adopted IASs. There are researchers who focus on different aspects
with regard to International Accounting standards, its application in Bangladesh, how to enforce
and comply with adopted IASs (e.g. Toha, 1986; Rashid, 1990; Azzizuddin, 1991 and
Chowdhury et. al, 1996). However, no researcher considers whether these accounting standards
should be needed to modify and whether we need a separate set of accounting standards other
than IASs. This paper seeks to find out the answers to these questions based on existing literature
on accounting standards in developing countries.

There are researchers who favour the adoption of IASs by developing countries. Developing
countries which are unable to mount their own standard-setting process can adopt IASs (Mason,
1978, p.124). Those developing countries having inadequate or weak professional accounting
bodies or regulatory agencies and incapable of producing indigenous accounting standards can
adopt IASC pronouncements at negligible costs (Peasnell, 1993). Reasons for such wholesale
adoption may be to (a) reduce the set up and production costs of accounting standards, b) to join
the international harmonisation drive, c) to facilitate the growth of foreign investment which may
be needed, d) to enable its profession to emulate well-established professional standards of
behaviour and conduct; and e) to legitimise the countries status as a full fledged member of the
international community (Belkaoui, 1985). In addition, many developing countries do not have
the economic and technological capacity and capability to develop their accounting and reporting
standards. They have therefore, accounting standards issued by a developed country or the
accounting standards issued by the IASC. The desire to ensure a smooth flow of international
investment may also be a factor for such adoption or adaptation. In case of Bangladesh, the
ICAB due to absence of recognition of accounting services as instrumental to economic
development has to take the initiative for standardization of the accounting and auditing practices
as a matter of self-regulation only (Azizuddin, 1989). Now, the question to what extent the
wholesale adoption are serving the purpose of the users?

Some researchers are opposed to the wholesale adoption for IASs by developing countries.
For example, Samuels and Oliga (1982,p.72) warn that international harmonisation may do more
harm than good for the Third World if it pre-empts the possibility of changing the old,
inappropriate accounting systems and evolving new ones which are better suited to their
development needs. International accounting standards, which may result from the
internationalisation of accounting, may be designed to assist users to make decisions at an
international level, which may be for different from the needs of users from developing
countries. Belkaoui (1985) argues that the international accounting standards for various
transactions occurring in the advanced countries may be totally irrelevant to some of the
developing countries as these transactions have little chance of occurring or may be occurring in
a fashion more specific to the context of the developing countries. The particular situation
occurring in the developing countries call for specific and local standard setting. Thus, it can be
argued that the IASC has failed to fulfil the needs of developing countries in preparing its
accounting standards Belkaoui, 1985) and to meet the needs of developing countries, IASs may
have to be revised (Peasnell, 1993) and these IASs should be modified by the respective
developing countries keeping in mind the economic, social, political and environmental needs of
the country.

The standards promulgated by the IASC are dealing with issues, which are expected to be of
common concerns to all member countries. However, it is not possible for any international
organization to develop accounting standards appropriate to the local needs of each and every
country and an international body can prescribe accounting standards covering only certain broad
areas of financial reporting (Basu, 1986). Local conditions of the developing countries like
Bangladesh may not be similar to those of developed countries (Rashid, 1990). In that case it has
been argued that the national standard-setting bodies rather than international body can formulate
standards necessary to serve the local needs. However, the ICAB did not make any attempt to
modify these accounting standards taking into consideration the local laws and regulations. The
ICAB is not aware of the very need for separate accounting standards and its requirements with
special reference to Bangladesh. The ICAB always claim and demand the credit for just
wholesale adoption of International Accounting Standards as the national accounting standard. It
is legitimate to raise the following questions:

1. What are the basic requirements of Bangladesh in relation to the national accounting
standards?

2. Do the adopted accounting standards fulfil the need or requirements of Bangladesh?

There are many developing countries in the world those are not members of the IASs and did not
develop any accounting standards for their own countries. However, ICAB is a member of the
IASC and have adopted fourteen accounting standards. This is the high time for Bangladesh to
analyse and study its requirements of accounting standards, to meet its specific requirements to
be determined by the financing arrangements, the capital market and the socio-economic
environments in Bangladesh.

References
Azizuddin, A.B.M (1989), Status of Accounting and Audit Standards in SAFA Countries.
Pakistan Accountant, January March, pp. 17-24.

Basu, A. K. (1986) Accounting Standards and Indian Accounting, Business Studies, Vol. XII,
Nos. 1 & 2, January & July. pp. 42-54.

Belkaoui, A (1985), International Accounting: Issues and Solutions. Westport, Conn:
Greenwood press.

Chowdhury, A. I, Chowdhury, A. K. and Salam, A. M (1996), Enforcement of Accounting
Standards: Proposed Arrangements for Bangladesh, The Cost and Management , November-
December, pp. 14-18.

Hye, M. A. (1992), International Accounting Standards and the Accounting Institutes of
Bangladesh, the Cost and Management, the Institute of Cost and Management Accountants of
Bangladesh, Vol. XX, No., July-August, pp. 28-32.

Mason, A. K. (1978), The Development of International Accounting Standards. ICRA
Ocassional Paper No. 17, International Centre for Research in Accounting, University of
Lancaster.

Peasnell K. V. (1993) "Accounting in Developing Countries: The Search for Appropriate
Technologies", Guest Editorial In R. S. O. Wallace, John M. Samuels and Richard J. Briston
(eds.), Research in Third World Accounting", Vol. 2, pp. 1-16. London: JAI Press.

Rashid, H. M. (1990), International Accounting Standards and their Adoption in Bangladesh,
Business studies, Vol. XVI No. 1 & 2 (July & December), pp.20-26.

Samuels J. M. and J. C. Oliga (1982) "Accounting Standards in Developing Countries", The
International Journal of Accounting Education and Research, Vol.18, No. 1, Fall, pp. 69-88.

Toha, M (1986), IAss in the Context of Bangladesh, a paper presented in the Third SAFA
Conference, the Institute of Chartered Accountants of Bangladesh (ICAB) and the Institute of
Cost and Management Accountants of Bangladesh (ICMAB), Dhaka, Bangladesh.

Wallace R. S. O. (1990) "Accounting in Developing Countries: A Review of Literature", In R. S.
O. Wallace, John M. Samuels and Richard J. Briston (eds.), Research in Third World
Accounting", Vol. 1, pp. 3-54, London: JAI Press.