Monthly News Brieﬁng from the Institute of Chartered ... · Monthly News Brieﬁng from the Institute of Chartered Accountants of Bangladesh (ICAB) ICAB NEWS BULLETIN Number 364

Monthly News Briefing from the Institute of Chartered Accountants of Bangladesh (ICAB)

ICABICAB NEWS BULLETINMarch-April 2020Number 364

ISSN 1993-5366

n the era of e-commerce or digital marketing, everyone is embracing automation. E-payments or digital transactions of every organization

would make it easy for the collection of taxes for the revenue authority. The existing system in tax administration of NBR is not efficient enough to track or chase the tax payers. National Board of Revenue(NBR) is giving due emphasis on full automation of its services.

As the chief guest Abu Hena Md. Rahmatul Muneem, Senior Secretary, Internal Resources Division (IRD) & Chairman, National Board of Revenue (NBR) made this remarks at a members’ conference on ‘Income Tax Policy Paper on the upcoming Amendment of Income Tax Ordinance 1984’ held on Sunday, 15 March 2020 at ICAB auditorium.

Nahar Ferdousi Begum, Member (Taxes Legal & Enforcement) and Ranjan Kumar Bhowmik, Member (Tax Survey & Inspection) were present as special guests. ICAB President Muhammad Farooq FCA delivered address of welcome. Mohammad Al Maruf Khan FCA, Partner, Howladar Yunus & Co., Chartered Accountants

and Mr. Snehasish Barua FCA, Partner, Snehasish Mahmud & Co., Chartered Accountants presented the Key Note paper.

The NBR Chief said, making tax return may not be mandatory for some. A widow or an old citizen requires bank account to receive old age allowance from the government. She/he does not necessarily require to submit tax return.

He also said, it is better to chase big tax payers for increasing the tax collection instead of chasing marginal tax payers considering cost involved in the process.

Ranjan Kumar Bhowmik said, NBR is eager to go for full automation process. Only twenty-two lacs TIN holders submit tax files while the total number of TIN holders is 49 lacs in the country. However, country’s four crores bank account holders are paying taxes through the banks, though they do not know they are paying taxes, he added.

Nahar Ferdousi Begum said, in some cases companies are being benefited from the tax exemptions, but the government is deprived of huge revenues, this is not encouraging. While

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Amendment of Income Tax Ordinance 1984 is Required to Improve ‘Paying Taxes’ Indicator

for Ease of Doing Business in Bangladesh

Amendment of Income Tax Ordinance... Bangladesh

ICAB has Sought Govt’s Stimuli for... Related Members

Telemedicine Service Organized by DRC-ICAB

ICAB Observed Birth Centenary... Rahman

President’s Communica-tion March-April 2020

Permission to Start Practice

Permission to Join as Partner

Permission to Continue Practice

Restoration of ICAB Membership

ICAB Issues COVID-19 Guidelines for... Auditors

Potential COVID-19 Impact on... Auditing

Technical Updates

Shahadat Participated in the Discussion... at FRC

Obituary

ICAB Writes to NBR for the Time Extension...Cos

Workshop on Practical Demonstration... Materiality

calculating the VAT of a company, it shows marginal profit or sometimes the company is not profitable. However, the same company is showing huge profit while floating IPOs in share market, which is otherwise paradox for our business entities. Auditors have the role to ensure better practices in corporate taxes, she added.

The Institute of Chartered Accountants of Bangladesh (ICAB) at the members’ conference came up with its suggestions and recommendations on upcoming amendments on Income Tax ordinance 1984 which included widening the tax net for revenue generation and higher Tax - GDP ratio, increased private sector investment, employment generation, export diversification, effort to attract more FDI (foreign direct investment)in order to improve "Paying Taxes" indicator for ease of doing business in Bangladesh.

ICAB President Muhammad Farooq FCA said, the Institute believes that there is a need for the rationalisation of the tax rate at the higher and lower end of the scale. Tax reform is felt necessary for long time, he added. As an apex professional institute of the country, ICAB finds many justifications to reform our tax system to meet the demand of the changing world, he suggested.

Further, ICAB has taken an initiative to suggest policy changes on the Upcoming Amendment of Income Tax Ordinance 1984 based on the practical experience of the ICAB members. He further said, the paper focuses the general design issues on how to make the tax system in Bangladesh more growth-friendly, simple , transparent and fairer. The conference was moderated by Md. Humayun Kabir FCA, Council Member and Past President of ICAB and the concluding remarks was made by Mohammed Forkan Uddin FCA, Council member, ICAB.

Chief Guest Mr. Abu Hena Md. Rahmatul Muneem, Chairman NBR speaking at a Members’ Conference of ICAB.

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Editorial Note from Chairman – Editorial Board

Dear Fellow Members and FriendsThis is an unprecedented time for mankind. The whole world seems at a standstill condition. The COVID-19 pandemic has already cost over 0.25 million of lives and more than4.0 million people are being affected by this viral disease. The numbers of fatalities are rising every day, so as the economic cost. Bangladesh is not exception to this. So far, more than 15000 people have become affected and about 200 people have left us forever due to this pandemic and this number is increasing day by day.This is not the first time the world is hit by such a global pandemic. However, the intensity of COVID-19 is much greater than any time in the past. A heavy burden of responsibility is on the government of every country including Bangladesh. Government of Bangladesh has taken few measures to control this disease and declared government holiday since 26 March, 2020. All shops, public transport, private and public offices, educational institutes, are closed since then. The economic activities are in a disarray condition. All industries including the small and medium business are closed and the workers and employees are remaining out of work. Thousands of people are in dire need of food and daily needs. The situation is going to get worse in the coming days/months. Government of Bangladesh has taken few incentive packages for the affected industries and sectors amounting nearing 100 thousand crores in phases. Government and charities are providing financial support to the distressed and affected people. Food distribution to the poor has been strengthened.For now, we are on preventive measures like social distancing and maintenance of hygiene. There is no let up until the world finds an effective vaccine. We hope this time will be over by the grace of Allah very soon.In this inexplicable time, undoubtedly the activities of ICAB is put on hold. However, we have to open up slowly and gradually giving the safety measures a top priority.We have collated the activities of March and April 2020 and brought this publication as there were very little activities during the month of April due to unfavourable condition. We are hoping the pandemic will be over sooner or later. We can resume our business as usual. We pray that the world recession don't hit hard the millions of people at home and abroad.In these days of uncertainty and agony, let us pray for everyone. Our prayer to Allah for all the departed souls, who have left us due to this pandemic.Finally we pray to Allmighty for the safety and welfare of all the members and our well-wishers, where ever we are. With best wishes and prayers!

Dr. Md. Abu Sayed Khan FCA

ICAB has Sought Govt’s Stimuli for CA Firms and Related Members

calculating the VAT of a company, it shows marginal profit or sometimes the company is not profitable. However, the same company is showing huge profit while floating IPOs in share market, which is otherwise paradox for our business entities. Auditors have the role to ensure better practices in corporate taxes, she added.




Members attending the conference.

OVID-19 spreaded in an unprecedented scale throughout the world. The effect of COVID-19 has already brought the world economy into recession and the worst is yet to come. Bangladesh

has also been hit hard as the country remained shutdown for a long time. CA firms under ICAB are affected due to prolong nationwide shutdown.

To mitigate the circumstances, ICAB sought BDT 100 Crore as stimulus package for the CA firms and related members under the Government’s bailout fund. ICAB has requested this stimuli as soft loan for the uninterrupted services of CA firms.

ICAB sent letters to the concerned ministries to include CA firms and related members as the professionals contribute Govt’s revenue greatly as preparer of financial statements, providing audit services, project consultancies etc. throughout the year.

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ICAB Observed Birth Centenary of Bangabandhu Sheikh Mujibur Rahman

Telemedicine Service Organized by DRC-ICABcalculating the VAT of a company, it shows marginal profit or sometimes the company is not profitable. However, the same company is showing huge profit while floating IPOs in share market, which is otherwise paradox for our business entities. Auditors have the role to ensure better practices in corporate taxes, she added.




ICAB observed Birth Centenary of Bangabandhu Sheikh Mujibur Rahman in its premises by offering Doa, slicing cake and lighting CA Bhaban.

elemedicine Service for ICAB members was arranged by Dhaka Regional Committee- ICAB on 21 March 2020. Situation emerged

from COVID-19 pandemic, services from public/private hospitals became tough to avail. Health experts are also discouraging to go to hospitals unless it is emergency. To address the issues, Telemedicine could be a solution for mild to moderate cases. Spouse or relatives of some of the ICAB members with specialization in different medical fields have agreed to extend their advices for our members. DRC-ICAB is coordinating the service. The list of doctors and their contact numbers are given as shown in the table.

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Dear fellow members and colleagues, as COVID 19 cases continue to mount across Bangladesh, it has become imperative that we maintain social distancing and stay safe at home. Undoubtedly, the whole world is confronted with uncertainties that did not exist before in such scale. Bangladeshis is not new to disasters or major humanitarian crises. The COVID 19 pandemic, however, is a crises of a completely different magnitude and we all are affected individually and collectively. It is at this backdrop, I am writing to you in our News Bulletin to let you know how we are mitigating the circumstances that we are in.

With the nationwide shutdown, the Institute have remained closed over a prolong period. We do not exactly know as to when we would be able to resume our normal office functions. This has created both functional and financial impediments for us at various ends.

To respond to urgency, a number of discussion meetings were held online through web conferencing which included discussion meeting of the Council members as well as other committees’ meetings. According to the decision, some important official letters were prepared and sent electronically to various authorities to

address our concerns. I shall highlight them in the succeeding paragraphs.

ICAB came up with a guideline for all its members on how to address in the preparation and audit of financial statements. The detail guidelines were prepared by the technical and research committee of the ICAB. Electronically, the guidelines were sent to all members. On 18 April, electronically, letters were sent to Regulatory Authorities including FRC, BSEC, IDRA and MRA regarding those of ICAB's efforts to assist the members of ICAB addressing the impact of COVID-19 outbreak in Financial Reporting and Auditing.

COVID 19 has caused disruptions to global trade, business, and education. Bangladesh is equally affected by this contagion. Our CA firms is also having the impact felt in manifold. The Institute have taken initiatives to address the concern; letters were sent to Hon’ble Finance Minister, Hon’ble Commerce Minister, Governor Bangladesh Bank, Secretary, Ministry of Commerce and Banking Division, Ministry of Finance for seeking Financial stimuli for CA Firms and related CA Professionals.

On 21 April Dhaka Regional Committee (DRC), ICAB sent a circular regarding

President’sCommunication

Telemedicine Service to all members to respond to the situation emerged from COVID-19 pandemic as the services from public/private hospitals became tough to avail. A list of contact numbers of the physicians was attached with the circular. A formal arrangement is also made with the Universal Medical Hospital, Dhaka for the treatment of sick members and their dependents including COVID 19 sickness.

To keep the activities ongoing as much as possible amidst this pandemic, I convened meetings with the senior officials of ICAB at regular intervals, and we held a good number of meetings and made discussion on ICAB’s activities through video conferencing. Now I would like to go over the activities sequentially.

We conducted meeting on 02 April 2020, to discuss on holding Exam of May-June 2020 Session and other administrative and technical matters.

I conducted a MANCOM Meeting with ICAB senior Management Team on 05 April 2020 at 12:00PM through Video Conferencing to review on going activities and projects, Online CPD for Members, Preparing sector wise members list for recognizing the employers, etc. We discussed as to how we can carryout official functions without jeopardizing health and safety issues.

On 9 April 2020, a discussion session of Council-ICAB was held through video conferencing regarding correspondence to include CA Firms and Accounting Profession as affected sector because of COVID-19 outbreak and to bring to the attention of Govt. in stimuli Package.

On 13 April 2020Secretary & CEOICAB wrote a letter to Chairman NBR requesting for the time extension of submitting Annual Returns of Firms and

waivering penalty for the delayed submission.

On 15 April 2020, Circular regarding” Impact of COVID-19 Outbreak on Financial Reporting and Auditing in Bangladesh “ was disseminated among the members.

On 16 April 2020, we wrote letters to Ministries and other concerned for financial stimuli for CA Professional and CA Firms.

On 18 April 2020, we wrote letters to Regulatory Authorities including FRC, BSEC, IDRA and MRA regarding ICAB’s efforts to assist the members of ICAB addressing the impact of COVID-19 outbreak in Financial Reporting and Auditing & shared the paper titled ‘Potential Impact of Corona Virus (COVID-19) Outbreak on Financial Reporting and Auditing in Bangladesh’.

On 21 April 2020, Telemedicine Service was arranged by DRC-ICAB for seeking medical advices for our members. A list of physicians and their contact numbers was given in the circular sent to all members.

On 28 April 2020, a virtual meeting with exam committees was conducted and we discussed the tentative Time schedule of CA Exam May-June Session 2020 and conducting Online Classes for CA Students ahead of Exam. Vice Presidents Mr. Sidhartha Barua FCA, Mr. Sabbir Ahmed FCA, and Mohammed Forkan Uddin FCA, Council Member Mr. Gopal Chandra Ghosh FCA, Secretary & CEO-ICAB and other concerned ICAB officials participated in the session.

Now, I would like to recall some of the activities that we undertook prior to post Corona situation. On 04 March 2020, a workshop on ‘Practical Demonstration of Audit Materiality, Journal Entry Testing, Audit Sampling and Opening Balances’

was held at ICAB. Practicing members and directors, senior managers of CA firms participated in the workshop. Mr. Ali Amjad Choudhury FCA, Partner, Howladar Yunus & Co., Chartered Accountants was the resource person. I thank all of them for their efforts.

On 15 March 2020 a members’ conference on ‘Income Tax Policy Paper on the upcoming Amendment of Income Tax Ordinance 1984’ was held at ICAB auditorium. Mr. Abu Hena Md. Rahmatul Muneem, Senior Secretary, Internal Resources Division (IRD) & Chairman, National Board of Revenue (NBR) was the chief guest while Ms. Nahar Ferdousi Begum, Member (Taxes Legal & Enforcement) and Mr. Ranjan Kumar Bhowmik, Member (Tax Survey & Inspection) were present as special guests. I delivered address of welcome while Mr. Mohammad Al Maruf Khan FCA, Partner, Howladar Yunus & Co., Chartered Accountants and Mr. Snehasish Barua FCA, Partner, Snehasish Mahmud & Co., Chartered Accountants presented the Key Note paper. Mr Md. Humayun Kabir FCA , Past President and Council Member moderated the session. Policy paper delivered was the hard work of the sub Committee for about 3 months. Undoubtedly, they all deserved high appreciation.

With these, I would like to wrap up today. We pray to Almighty for His divine blessings in this month of Holy Ramadan. We pray for everyone’s good health free from this epidemic. May we all resume our normal activities sooner. We look forward having a safer tomorrow. With best wishes to you and all your loved ones.

Muhammad Farooq FCA President

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Permission to Start PracticeThe following members have been permitted to Start Practice as Public Accountants with effect from the date mentioned against their respective names:

Name Effective Date

Sk. Md. Tarikul Islam FCA (1238) 26 January 2020PartnerHoda Vasi Chowdhury & Co.Chartered AccountantsBTMC Bhaban (8th Level)7-9 Kawran Bazar, Dhaka-1215

Shaikh Hasibur Rahman FCA (1512) 26 January 2020PartnerHoda Vasi Chowdhury & Co.Chartered AccountantsBTMC Bhaban (8th Level)7-9 Kawran Bazar, Dhaka-1215

Tariquzzaman Khan FCA (687) 28 January 2020PartnerMasud Altaf & Co.Chartered Accountants16/3, Babor Road (G. floor) Block-BShaymoli, MohammadpurDhaka-1207

Permission to Join as PartnerSk. Md. Tarikul Islam FCA (1238) and Shaikh Hasibur Rahman FCA (1512) have been permitted to form a partnership and continue practice under the name and style of:

Name Effective DateHoda Vasi Chowdhury & Co. 26 January 2020Chartered AccountantsBTMC Bhaban (8th Level)7-9 Kawran Bazar, Dhaka-1215

The other partner of the firm: Manzoor Alam FCA (132), Showkat Hossain FCA (137), M Munjurul Hassan FCA (450), A F Nesaruddin FCA (0469) and Sabbir Ahmed FCA (770).

Ashraful Ameen FCA (513) has been permitted to form a partnership and continue practice under the name and style of:

Name Effective DateSyful Shamsul Alam & Co. 31 December 2019Chartered AccountantsParamount Heights (Level-6 &2)65/2/1, Box Culvert RoadPurana Paltan, Dhaka-1000

The other partner of the firm: Md Syful Islam FCA (615), AKM Shamsul Alam FCA (584) and Md Rafiqul Islam FCA (432).

Reza Humayun Morshed Hayat ACA (1064) has been permitted to form a partnership and continue practice under the name and style of:Name Effective DateMostafa Kamal & Co. 07 Janyary 2020Chartered AccountantsPaltan Tower (7th floor), Suit 70687 Purana Paltan Line, Dhaka-1000

The other partner of the firm: A H Mostafa Kamal FCA (1500).

Tariquzzaman Khan FCA (687) has been permitted to form a partnership and continue practice under the name and style of:Name Effective DateMasud Altaf & Co. 28 Janyary 2020Chartered Accountants16/3, Babor Road (G. floor)Block-B Shaymoli, MohammadpurDhaka-1207

The other partner of the firm: Md Altaf Hossain Masud FCA (684).

Permission to Continue PracticeThe following members have been permitted to Continue Practice as Public Accountants with effect from the date mentioned against their respective name:

Name Effective DateAshraful Ameen FCA (513) 31 December 2019PartnerSyful Shamsul Alam & Co.Chartered AccountantsParamount Heights (Level-6 &2)65/2/1, Box Culvert RoadPurana Paltan, Dhaka-1000

Reza Humayun Morshed Hayat ACA (1064) 07 Janyary 2020PartnerMostafa Kamal & Co.Chartered AccountantsPaltan Tower (7th floor), Suit 70687 Purana Paltan Line, Dhaka-1000

Restoration of ICAB MembershipMembership of the following person have been restored with effect from the date mentioned against their name:

Name Effective DateNirmol Chandra Sarker FCA (957) 20 February 2020Director-Finance and PlanningPhilip Morris Trading (Thailand) Co. Ltd.689 Bhiraj Tower, 39-40th FloorSukhumvit Road, Klongton NuaWattana, Bangkok 101100Thailand

Jhuma Laila ACA 10 February 202042A Northampton DriveGlenfield, NSW-2167Australia

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he Institute of Chartered Accountants of Bangladesh (ICAB) has come up with a

guideline for all its members on what and how to address in the preparation and audit of financial statements during the coronavirus pandemic.

The detailed guideline, prepared by the technical and research committee of the ICAB, was sent to the chartered accountants in the middle of this month.

Sabbir Ahmed, ICAB vice-president and Chairman of Technical and Research Committee, told that accounting and auditing standards demand an impact forecast of factors in companies’ businesses.

It includes the assessment of significant risks, forecasts on asset valuation and recoverability, and very importantly, the question of going concern—if the company will be able to continue its business or not.

“In the uncertain time of the pandemic, it is very important for the users of financial statements that they get the picture of risks and uncertainties right as much as possible,” Sabbir said.

The ICAB told its members, who are in diversified roles ranging from management positions to external auditing, that the uncertainty and business impacts of the not-seen-in-decades global crisis should be reflected in companies' disclosures, and auditors' observation and opinion.

For that, compliance with the followed accounting standards is a must.

Like all others, the ICAB said the extent and ultimate economic impact of the pandemic are still unknown and it will vary among industries.

The nature of individual entities and risk profile of the industries concerned will determine the impact of the crisis,

said the primary regulator of the country's external auditors.

The ICAB named some sectors that might be more affected during initial stages.

Export-oriented industries, including their backward linkage, may suffer due to order cancellations, said the letter.

The list of sufferers includes travel, tourism and hospitality industries on account of both lower local and international demand and restrictions as well.

Lenders, due to deferral of loan repayment, slower credit growth and stress of borrowers may also suffer in business. Meanwhile, the insurance sector may suffer from lower renewal, return on investments and higher claims.

If public and private sector projects are delayed, the construction and relevant manufacturing sectors will face difficulties. Besides, businesses that rely on inward remittance may also suffer.

In such a context, ICAB members are guided to enquire, observe and opine whether the publisher of the financial

statement is likely to survive this hard time and operate in the coming days.

Besides, there should be a better reflection of the true nature of inventories, existing assets, receivables, orders, the possibility of successful repayment of loans and other liabilities in this unusual time.

The ICAB also said that travel restriction during the time of pandemic has increased challenges for auditors to check essential information. It also caused difficulties for companies about timely assessment of things and preparing statements.

To assist the member of the institute involved in preparation and presentation of the financial statement in line with IFRS and other applicable relevant standards and regulations and the member involved in auditing (practicing members), ICAB Technical and Research Committee (TRC) issued letters to Bangladesh Bank, Financial Reporting Council, Bangladesh Securities and Exchange Commission, Insurance Devolvement Authority and Micro-Credit Regulatory Authority for addressing the issues of financial reporting and auditing emerged from COVID-19 outbreak.

ICAB Issues COVID-19 Guidelines for Accountants and Auditors

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o assist ICAB members in business/service involved in preparation and presentation of

the financial statements in line with IFRS and/or other applicable financial reporting standards/regulations and members in practice engaged in conducting the audit of such financial statements in accordance with ISA, the Technical and Research Committee (TRC) of the Council-ICAB is pleased to issue the attached document ‘Annexure A’ addressing the related financial reporting and auditing issues emerging from COVID-19 outbreak.

ANNEXURE-A

PART A: FINANCIAL REPORTING IMPACT

What started in the Chinese city, Wuhan in Hubei province during December 2019 as an outbreak of unknown virus, was declared as a Pandemic by World Health Organization (WHO) on 11 March 2020 with a name tag of COVID-19. This Pandemic has created global disruption at an unprecedented level and at such speed that most of us could not comprehend even couple of weeks earlier. Along with great human toll and impact on public health, COVID-19 has also created devastating effect on global trade, commerce and industry with consequential implications on financial reporting by the affected entities and audit of financial statements of those entities.

Although COVID-19 originated during December 2019 but as at 31 December 2019 it was not widely known outside China nor any impact of this was felt anywhere outside China. COVID-19 started to get global attention only

towards end of January 2020 when WHO declared this as health emergency on 30 January 2020. Finally, on 11 March 2020 WHO declared it a Pandemic and by this time COVID-19 has created a global shock and disturbance not seen in many decades.

To tackle outbreak of COVID-19, many countries went for complete lock down running into weeks, closed international borders with restriction on movement of people, implemented social distancing and other strict conditions. All these measures have severe effects on global trade and commerce in many forms ranging from supply chain disruptions to closures of business activities. To support business and economic activities during this critical time and ensure liquidity in the market Governments across the world has announced various types of economic stimulus program.

The Government of Bangladesh has also announced a number of economic stimulus packages for affected businesses. The major stimulus packages declared so far are creation of BDT 5,000 crore loan fund at 2% interest rate with relaxed repayment term for export-oriented industry to pay labour wages for next three months, special loan funds with lower interest rate of BDT 30,000 crore for big industries and service sector and BDT 20,000 crore for small and medium enterprises (SMEs) including the cottage industries, Export Development Fund (EDF) loans, extension of tenure for settlement of foreign currency loans, reduction in CRR requirement, re-fixation of repo rate, direct purchase of additional government securities in excess of SLR

requirement from secondary market on market price etc.

Since every business and industry would have different impacts from COVID-19, it is very important for each entity to make its own individual assessment. We have considered COVID-19 impact on financial reporting in two groups; one group are those entities with 31 December 2019 reporting date and the other group are those entities with the reporting date of 31 March 2020 or later. Entities preparing interim financial statements for the quarter/period ended 31 March 2020 shall also be considered in the second group.

I. First Group of Entities with reporting period ended on or before 31 December 2019

For entities with the reporting date of 31 December 2019 or earlier, the financial reporting effects of the COVID-19 outbreak are generally non-adjusting events (with the exception of going concern) because the significant changes in business activities and economic conditions as a result of COVID-19 events took place well after the reporting date (i.e. declaration of pandemic and actions taken to contain the COVID-19 outbreak).

IAS 10 has defined non-adjusting event as an event after the reporting period that is indicative of a condition that arose after the end of the reporting period, and an adjusting event as an event after the reporting period that provides further evidence of conditions that existed at the end of the reporting period and on the other hand. As stated above, applying this definition of IAS 10, for entities with

Potential COVID-19 Impact on Financial Reporting and Auditing

reporting period ended on or before 31 December 2019 other than going concern COVID 19 related matters are most likely to be non-adjusting events. In Bangladesh, all Banks, NBFI, Insurance companies and their subsidiaries as well some foreign-owned/ multinational entities are classified into this Group. Depending on the timing of the financial statements authorized for issue, disclosure of COVID 19 related subsequent events including potential financial impact, if known, may require in the financial statements or annual report of these entities.

Going concern

Management should consider the potential implications of COVID-19 when assessing the entity’s ability to continue as a going concern. An entity is no longer a going concern if management either intends to liquidate the entity or to cease trading, or has no realistic alternative but to do so. In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future, which is at least, but is not limited to, twelve months from the date when the financial statements are authorised for issue. Material uncertainties that might cast significant doubt upon an entity’s ability to continue as a going concern should be disclosed in accordance with IAS 1.

The assessment will be specific to the entity's circumstance and also to consider external supports expected by the entity (i.e. declaration of salary support for export industry, deferral of loan repayment, additional borrowing at lower interest rate etc.). While conducting going concern assessment, the entity need to specifically consider the extent of operational disruption, potential reduction in demand for products or services, contractual

obligations due or anticipated within one year, potential liquidity and working capital shortfalls and access to existing sources of capital. In making its going concern assessment, IAS 10 Events after the Reporting Period requires an entity to consider events up to the date of authorization of the financial statements.

If the entity is a going concern, the financial statements should be prepared on a going concern basis. If not, they should be prepared on a basis other than going concern. An entity shall not prepare its financial statements on a going concern basis if events after the end of the reporting period result in the going concern basis becoming inappropriate. Due to such rapid changes in economic environment from COVID-19, an entity at 31 December 2019 reporting date may be a going concern, but on the date when financial statements are authorised for issue no longer a going concern due to COVID-19 impact, and in such case the going concern basis shall not be used.

II. Second group of entities with reporting period ended on or after 31 March 2020 including interim reporting

For entities with reporting periods ended on 31 March 2020 or subsequent date (i.e. 30 June 2020) as well as those entities reporting interim financial statements for the Quarter/period ended 31 March 2020, all COVID-19 related impacts are current period events requiring appropriate recognition in the financial statements.

Changes in the economic activity caused by the Pandemic will cause many entities to renegotiate the terms of existing contracts and arrangements, and even cancellation of contracts/orders. As we have seen in Bangladesh, many overseas buyers of

local RMG and Textile products abruptly cancelled or deferred confirmed orders and some even refused to accept those orders awaiting shipment or in the final stage of delivery. Such situation may result multiple implications on financial reporting including but not limited to going concern assumption, revenue recognition (IFRS 15), inventory valuation (IAS 2), impairment assessment (IAS 36), onerous contract (IAS 37), debt servicing and compliance with covenants (IFRS 7) etc. In addition, contract modifications may result changes in terms of financial assets and liabilities (IFRS 9), leases (IFRS 16), compensation arrangements with employees (IAS 19) etc.

Similarly, an entity use forecast information (i.e. cash flow, production capacity utilization, etc.) for multiple purposes such as, the impairment of non�financial assets, expected credit losses, fair value of assets and liabilities, the recoverability of deferred tax assets and the entity’s ability to continue as a going concern. Because of COVID-19 impact, preparation of reliable forecast information can be challenging and need to be closely monitored as this can have pervasive impact across multiple elements of financial statements.

The key potential financial reporting impacts are summarised as follows:

Impairment of non-current assets and goodwill

Due to the lower demand of products, many entities would reduce its operation and some may have closed the operation altogether resulting lesser utilization of capacity and hence potential impairment of PP&E. Also due to adverse impact on future cash flows resulting from lower sale/demand of products or services, any goodwill recognized during business combination may need to be impaired (IAS 36).

� Significant Increase in Credit Risk (SICR) and Expected Credit Losses (ECLs)

IFRS 9 sets out a framework for determining the amount of expected credit losses (ECL) that should be recognised. It requires that lifetime ECLs be recognised when there is a significant increase in credit risk (SICR) on a financial instrument. Management shall apply judgment and adjust their approach to determine ECLs in different circumstances. A number of assumptions and expectations underlying the way ECLs have been implemented previously may no longer remain valid in the current situation resulted from COVID-19. Therefore, each entity needs to re-assess their credit risk, timing and uncertainty of future cash flows, moratorium in repayment declared by Government, potential insolvency of customer and other related factors to calculate provision for impairment of financial assets (IFRS 9).

IFRS Foundation on 27 March 2020 has issued a publication on “Accounting for expected credit losses applying IFRS 9 Financial Instruments in the light of current uncertainty resulting from the COVID-19 pandemic” which can be referred for further guidance on ECL impact. It is however, worthwhile to mention that in Bangladesh, Banks and NBFI follow Bangladesh Bank Circulars to calculate required loan loss provisions which are based on actual duration of overdue/arrear and hence, IFRS 9 ECL model is not followed for those entities. Nevertheless, other entities having trade and other receivables need to consider COVID-19 impact to assess ECL of those balances.

Fair value measurement

Due to significant changes in macro-economic assumptions as well as

entity specific conditions from COVID-19, key estimates and variable previously used for fair value measurement of assets and liabilities (i.e. Level 2 and Level 3 inputs) may be no longer valid and hence require re-assessment and supported by the latest input (IFRS 13).

Revenue Recognition

Due to cancellation of orders and modification of contractual arrangement with customers factors such as probability of return, further discount, timing of transferring risk and reward due to supply chain disruption need to be assessed before recognizing revenue (IFRS 15).

Valuation of inventory

Since inventories shall be measured at lower of cost and net realizable value, subsequent reduction in selling price of goods or cancellation of customer orders may indicate lower net realizable value of related inventories and hence write down may require (IAS 2).

Employee benefits

Due to COVID-19 there may be changes to remuneration policies and especially for defined benefit plan changes in key actuarial assumptions (i.e. lower discount rate, lower return from financial assets due to reduced interest rate) which shall be considered (IAS 19).

Provisions for Onerous contracts

Delay in fulfilment of contractual obligations may result in penalties or compensation claims unless otherwise protected and need to be provided for (IAS 37).

Deferred tax assets

If any deferred tax asset is recognized on carry forward tax losses the related assumption need to be revisited

especially whether the entity can still make adequate taxable profit after COVID-19 impact which will be available to offset such carry forward tax losses (IAS 12).

Leases

With adverse impact in business many leases which were earlier expected to be renewed and therefore used in calculation of lease assets/liabilities may not be renewed now and hence need to be revisited along with new calculation of lessee’s incremental borrowing rate on account of change in its borrowing costs consequent to lower interest rate, decline in its credit rating, etc. (IFRS 16).

Insurance claims

COVID-19 would impact insurer from lower policy renewal, refund of premium for business cancellation, higher claims, and lower returns from investment. On the other hand, an entity taking insurance policy may need to assess whether it is entitled to any claim/ compensation from loss of profits and business disruption including timing of recognition of such claim/ compensation.

Government stimulus package

As stated above, the Government of Bangladesh has announced a number of economic stimulus packages for affected businesses. However, so far all these packages are effectively loan arrangement with easier repayment option and at reduced borrowing rate to be disbursed by Banks and NBFIs. Therefore, further scrutiny of these incentives are required along with other existing regulatory frameworks, before an assessment can be made whether such incentive would fall under ‘IAS 20: Accounting for Government Grants and Disclosure of Government Assistance’. Since any impact of Government Stimulus packages would take place

only after 1 April 2020, we shall cover this in more detail in our subsequent analysis.

PART B: IMPACT ON AUDIT OF FINANCIAL STATEMENTS

The COVID-19 related challenges on an auditor while conducting audit of financial statements are described below:

Travel and other movement restrictions

Due to increasing restrictions on travel, meetings and access to client locations for COVID-19 (i.e. in Bangladesh, Government has declared holiday initially from 26 March to 4 April 2020 which is now extended to 25 April 2020), auditors are facing practical difficulties in carrying out audits. Despite all these logistical challenges and underlying conditions, the delivery of high quality audit cannot be compromised. Audits should continue to be planned and performed in compliance with the International Standards on Auditing (ISA). To enable the auditors to perform audits, additional time may be required and alternative audit procedures may need to be performed in order to obtain sufficient appropriate audit evidence.

The auditor should immediately communicate any logistical challenges to conduct audit with both management and ‘Those Charged With Governance (TCWG)’ including any additional support they require from the client. The auditor should consider alternate audit procedures to obtain sufficient and appropriate audit evidence.

For example, if a client’s year-end is 31 March 2020 and due to country-wide lockdown the Auditor could not able to attend/observe physical stock take, another stock take attendance shall be

arranged immediately at a subsequent date and physical balance found during the subsequent date stock take shall be reconciled to the stock report at the year-end (ISA 501 Audit Evidence - Specific Considerations for Selected Items). In such case, the auditor may add an ‘Other matter’ paragraph in audit report in accordance with ‘ISA 706 (Revised), Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor’s Report.’

Similarly, if an auditor is conducting audit of consolidated financial statements due to COVID-19 related matters audit procedures on the component FS including reviewing work component audit could not be performed as per ‘ISA 600 Special Considerations—Audits of Group Financial Statements’ or the auditor may not able to receive direct external confirmations from banks, debtors, lawyers, suppliers etc. in accordance with ‘ISA 505 External Confirmations’, the auditor need to consider whether alternate audit procedures can be applied.

If the auditor could not able to conduct any alternate audit procedures due to restrictions from COVID-19 and it was not possible to satisfactorily conclude on the basis of alternate audit procedures, the audit report may need to be modified in accordance with ‘ISA 705 (Revised), Modifications to the Opinion in the Independent Auditor’s Report.’

Going concern

ISA 570, Going concern confirms that the auditor’s responsibilities are to obtain sufficient appropriate audit evidence and conclude on the appropriateness of management’s use of the going concern basis of accounting in the preparation of the financial statements, and to conclude, based on

the audit evidence obtained, whether a material uncertainty exists about the entity’s ability to continue as a going concern.

The auditor will only be able to form a conclusion relating to going concern once management has made its own assessment. The auditor should inquire of management and those charged with governance as to what information available about the future, and determine whether this has been appropriately considered as part of management’s assessment. The auditor should apply similar considerations to those of management, in assessing the appropriateness of the going concern assumption.

If events or conditions have been identified that may cast significant doubt on the entity’s ability to continue as a going concern, the auditor shall obtain sufficient appropriate audit evidence to determine whether or not a material uncertainty exists. This should, for example, include a detailed and robust review of up to date forecasts, cash flows, sensitivity analyses and reviews of COVID-19 contingency plans and impact assessments conducted by management.

Impact on auditor’s report

The implications of COVID-19 on the auditor’s report will depend on the sufficiency and appropriateness of audit evidence obtained, the basis of preparation adopted and the disclosures provided in the financial statements.

For example, there is a situation where management has concluded that the entity is a going concern but there is a material uncertainty and if the auditor agrees that the entity is a going concern, and the material uncertainty is adequately disclosed in the financial statements, in the auditor’s report, the

‘conclusions relating to going concern’ section should be removed and instead a ‘material uncertainty related to going concern’ section shall be included. However, if management is not willing to disclose material uncertainties, then the auditor may need to consider issuing a modified auditor’s report.

Similarly, due to COVID-19 impact operating activities and cash flow of an entity can be significantly reduced during the first two quarters of 2020 and management has concluded that such reduction is temporary and once the outbreak is contained the entity would be back to its normal activities in very short period of time. Accordingly, management has not made any significant adjustment to the operating plan/cash flow forecast used for impairment assessment and just recalculated discount rate and other market related conditions. If the auditor concludes that management’s assessment is reasonable but there is a risk that if the spread of outbreak is not contained by June 2020 there are some key assumptions that would require modification with possible impairment charges, the auditor can issue audit report with an EOM paragraph as per ‘ISA 706 (Revised), Emphasis of Matter Paragraphs and Other Matter Paragraphs’ in the Independent Auditor’s Report without any modification and highlighting the uncertainty.

Delaying the issuance of audit report

Given the unpredictable nature and impact of the COVID-19 outbreak, in some cases it might be appropriate to consider the possibility of delaying the approval of the financial statements and issuance of audit report until more certainty about the impact of such outbreak is known. For example, if

Bangladesh Government has made general declaration of economic stimulus package to support a particular industry but the detail of that package is not yet announced and if management has assumed certain incentive from that Government package to support its going concern assumption, the auditor may like to wait until the detail package is announced to satisfactorily conclude on appropriateness of going concern assumption.

Consequently, auditors may not be able to meet previously agreed deadlines and required to wait for some time in order to satisfactorily obtain sufficient and appropriate audit evidence for issuing an unmodified audit report. If this is the case, the auditor should immediately inform both management and TCWG about the possible delay including the reason for such delay. Due to regulatory timeline for submission of audited financial statements, the client may need to approach the concerned regulators at the earliest opportunity to seek extension.

However, if the client is not willing to extend the timeline of completing the audit, the Auditor need to assess whether they have obtained sufficient and appropriate audit evidence to issue an audit opinion. If the answer is negative, the auditor needs to appropriately modify audit report.

Effective Communications

COVID-19 brought in significant changes at very fast pace with limited time to react by an auditor. At the same time, during this period of global turmoil and uncertainty, the users of financial statements in general and investor community in particular would expect to see high quality audit more than ever. Accordingly, this is quite complex time for an auditor with added public

expectation and hence the auditor should maintain continuous communication line with management and TCWG and constantly made them aware of any audit related issue, be it restrictions of movement or difficulties in obtaining sufficient and appropriate audit evidence. Some of the matters need to be communicated with the TCWG, in particular with audit committee are as follows:

Significant changes in the planned scope and timing of the audit, including new significant risks and modifications to the audit plan and key audit matters (KAM);

Major difficulties/restrictions encountered during the audit in areas such as absence from physical attendance during stock take, unavailability of management for corroborative inquiry, lack of response in external confirmations etc. resulting lack of sufficient appropriate audit evidence and/or completing alternate audit procedures;

Critical matters that were discussed or subject to correspondence with management, including disagreements on key estimates and judgments taken by management on COVID-19 related impact;

Expected modifications to the auditor’s report, e.g. modifications as a result of a scope limitation or disagreement, emphasis of matter paragraphs in respect of significant uncertainty, other matter paragraph to highlight alternate audit procedures etc.;

Expected delay in finalization of audit due to changes circumstances and lack of clarity to validate reasonableness of management assumptions on key COVID-19 related matters. As mentioned above in the example that if

T

management is planning to rely on Government support for going concern assumption and the detail of the support package is not yet available, the auditor may need to wait for satisfactorily conclude on the appropriateness of going concern assumption.

Validation of critical management estimates and judgments

As explained under financial reporting section, due to COVID-19 related issues, a number of areas in financial reporting shall be impacted and management need to make critical estimates and judgments about those matters. Such areas of critical estimates and judgments include among others, business plan and forecast to support going concern assumption, impairment assessment of non-current assets, expected credit losses, fair value of assets and liabilities without active market, etc. However, due to rapidly changing environment, in many such cases information and data used by management could be very difficult for an auditor to validate and assess for reasonableness.

Nevertheless, ‘ISA 540 Auditing Accounting Estimate, including Fair Value Accounting Estimates, and Related Disclosures’ require an auditor to evaluate, based on the audit evidence, whether the accounting estimates in the financial statements are either reasonable, or are misstated. In addition, auditor shall evaluate the adequacy of the disclosure of estimation uncertainty in the financial statements and review whether there are indication of possible management bias in making those estimates.

Accordingly, auditor shall observe all related steps outlined in ISA 540 and in other auditing standards to conclude that all critical management estimates

and judgments are reasonable and should also obtain management representation as per ISA 580. However, if an auditor is unable to conclude on reasonableness of critical estimates and judgment applied by management they should discuss the matter with TCWG and try to resolve differences through developing a ‘Point Estimate or Range’ as prescribed in ISA 540. However, despite all these efforts if the disagreement persist and there are no alternatives, the auditor may consider modification of the audit report in accordance with ISA 705.

For ease of reference, a list of potential COVID-19 impacts on audit with reference to the related international standards on auditing are given below:

Identifying new risks from COVID-19 related impact and re-assessments of the initial Risk of Material Misstatements (RMM) and Materiality in line with ‘ISA 315 (Revised) Identifying and Assessing the Risks of Material Misstatement Through Understanding the Entity and its Environment’ and ‘ISA 320 Materiality in Planning and Performing an Audit’.

Evaluate applicability of going concern assumption used by management for the preparation of the financial statements in line with ‘ISA 570 (Revised) Going Concern’.

Consider all subsequent events from the date of year-end to the date signing audit report and assess whether these are adjusting or non-adjusting event requiring recognition and disclosure in the financial statements respectively and auditors obligation in accordance with ‘ISA 560 Subsequent Events’.

Obtain specific representations from management especially on any estimates and judgments applied related

to COVID-19 related impact in line with ‘ISA 580 Written Representations’.

Formulation of Auditor's Opinion in accordance with ‘ISA 700 (Revised) Forming an Opinion and Reporting on Financial Statements’, ‘ISA 705 (Revised) Modifications to the Opinion in the Independent Auditor's Report’, ‘ISA 706 (Revised), Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor's Report’.

Due to COVID-19 related impact if any changes is required in Key Audit Matters (KAM) previously communicated to TCWG updated KAM should be discussed with Management and TCWG in accordance with ‘ISA 701 Communicating Key Audit Matters in the Independent Auditor's Report’.

Risk of material misstatements in financial statements due to fraud including fraud risk factors identified previously may require re-assessment due to pervasive changes in economic environment from COVID-19 related impact and hence the auditor should consider this matter in audit in in accordance with ‘ISA 240 The Auditor's Responsibilities Relating to Fraud in An Audit of Financial Statements’.

All listed entities in Bangladesh are required to publish annual reports and most likely there would be comments about COVID-19 and its impact on those entities in their annual reports. The auditor now has an added responsibility to read and comment on other information published along with the financial statements such as contents in annual report. Accordingly, the auditor should read such disclosure in the annual report and follow the steps prescribed in ‘ISA 720 (Revised) The Auditor's Responsibilities Relating to Other Information’.

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Technical Updates1. IASB decides on new effective date for IFRS 17 on or aftert 1 January 2023The International Accounting Standards Board (Board) has decided that the effective date of IFRS 17 will be deferred to annual reporting periods beginning on or after 1 January 2023. The Board also decided to extend the exemption currently in place for some insurers regarding the application of IFRS 9 Financial Instruments to enable them to implement both IFRS 9 and IFRS 17 at the same time.

Timely implementation of IFRS 17 is vital to improve the quality and comparability of accounting for insurance contracts. However, the Board’s decision to defer the effective date by two years from the original date to 2023 will enable insurers around the world to implement the new Standard at the same time, which the Board considers to be beneficial for investors, insurers and other stakeholders.

2. Application of IFRS 9 in the light of the coronavirus uncertaintyA document regarding the application of IFRS 9 Financial Instruments during this period of enhanced economic uncertainty arising from the covid-19 pandemic was published by IASB.

The document is prepared for educational purposes, highlighting requirements within the Standard that are relevant for companies considering how the pandemic affects their accounting for expected credit losses (ECL). It does not change, remove nor add to, the requirements in IFRS 9 Financial Instruments. It is intended to support the consistent and robust application of IFRS 9.

IFRS 9 was developed in response to requests by the G20 and others to provide more forward-looking

information about loan losses than the predecessor Standard and to give transparent and timely information about changes in credit risk.

The document acknowledges that estimating ECL on financial instruments is challenging in the current circumstances and highlights the importance of companies using all reasonable and supportable information available—historic, current and forward-looking to the extent possible—when determining whether lifetime losses should be recognised on loans and in measuring ECL.

The document reinforces that IFRS 9 does not provide bright lines nor a mechanistic approach in accounting for ECLs. Accordingly, companies may need to adjust their approaches to forecasting and determining when lifetime losses should be recognised to reflect the current environment.

The IFRS Foundation and the International Accounting Standards Board continue to work in close cooperation with regulators and others regarding the application of IFRS 9, and the document encourages companies to consider guidance provided by prudential and securities regulators.

3. Discussion Paper and comment letters: Business Combinations—Disclosures, Goodwill and Impairment

The International Accounting Standards Board (Board) has published a Discussion Paper on possible improvements to the information companies report about acquisitions of businesses to help investors assess how successful those acquisitions have been. The Board is also seeking feedback on how companies should account for goodwill arising from such transactions.

Better disclosures about acquisitions

Acquiring another business is a common way for companies to grow. However, acquisitions do not always perform in subsequent years as well as management initially expected. Investors would like to know more about how an acquisition is performing in relation to such expectations, not least so that they can hold a company’s management to account for its acquisition decisions.

In response to this feedback, the Board is suggesting changes to IFRS Standards that would require a company to disclose information about its objectives for an acquisition and, in subsequent periods, information about how that acquisition is performing against those objectives.

Accounting for goodwill

The Board has also considered whether to change how a company accounts for goodwill. Companies must test goodwill for impairment annually, but stakeholders have mixed views about whether this test is effective. Some argue that the impairment test informs investors about an acquisition’s performance. Others say that the test is costly and complex, and that impairment losses on goodwill are often reported too late.

The Board tried to identify a better impairment test—one that would require a company to report at an earlier date if its goodwill had lost value. The current test provides information to investors, but it tests a broader set of assets than just goodwill. The Board has concluded that there is no alternative that can target goodwill better and at reasonable cost. It expects that the new disclosure requirements would provide investors with the information needed on the performance of an acquisition.

Some stakeholders have suggested that the Board should reintroduce amortisation—the gradual write-down of goodwill over time, which was the requirement in IFRS Standards until 2004. But, having considered the pros and cons of amortisation, the Board’s preliminary conclusion is that it should retain the impairment-only approach, because there is no clear evidence that amortising goodwill would significantly improve the information that companies report to investors.The comment letter period is open until 31 December 2020 through IFRS Foundation website.

4. IASB consults on amendment to leases Standard to help companies with covid-19-related rent concessions

The International Accounting Standards Board (Board) has proposed to amend IFRS 16 Leases to make it easier for lessees to account for covid-19-related rent concessions such as rent holidays and temporary rent reductions.

The objective of the amendment is to give timely relief to lessees when applying IFRS 16 to covid-19-related rent concessions while still enabling them to provide useful information about their leases to investors.

IFRS 16 specifies how lessees should account for changes in lease payments, including concessions. However, applying those requirements to a potentially large volume of covid-19-related rent concessions could be practically difficult, especially in the light of the many challenges stakeholders face during the pandemic. The Standard requires lessees to assess individual lease contracts to determine whether the concessions are to be considered lease modifications and, if that is the case, the lessee must remeasure the lease liability using a revised discount rate.

The proposed amendment would exempt lessees from having to consider whether particular covid-19-related rent concessions are lease modifications, allowing them to account for these changes as if they were not lease modifications. The amendment would apply to covid-19-related rent concessions that reduce lease payments due in 2020.

The report can be accessed at:https://www.ifrs.org/news-and-events/2020/04/amendment-to-leases-standard-to-help-companies-with-covid-19-related-rent-concessions/

The proposed amendment complements the educational materials published on 10 April 2020—IFRS 16 and covid-19at following link:

https://cdn.ifrs.org/-/media/feature/supporting-implementation/ifrs-16/ifrs-16-rent-concession-educational-material.pdf?la=en

5. Exposure Draft and comment letters: Interest Rate Benchmark Reform—Phase 2: Proposed amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16

The International Accounting Standards Board (Board) has proposed amendments to IFRS Standards to assist companies in providing useful information to investors about the effects of interest rate benchmark reform on financial statements.

The Board has been considering the effects of interest rate benchmark reform on financial reporting since 2018, splitting its work into two phases. The first phase culminated in amendments to some IFRS Standards in September 2019, providing temporary exceptions to specific hedge accounting requirements and requiring related disclosures in the period during which there is uncertainty about

contractual cash flows arising from interest rate benchmark reform.

The Board has now published further proposed amendments as part of the second phase of its project. These proposed amendments aim to address issues affecting financial statements when changes are made to contractual cash flows and hedging relationships as a result of the reform.

The main proposed amendments relate to:

modifications—a company would not derecognise or adjust the carrying amount of financial instruments for modifications required by interest rate benchmark reform, but would instead update the effective interest rate to reflect the change in the interest rate benchmark;

hedge accounting—a company would not discontinue its hedge accounting solely because of replacing the interest rate benchmark if the hedge meets other hedge accounting criteria; and

disclosures—a company would disclose information about new risks arising from the interest rate benchmark reform and how it manages the transition to alternative benchmark rates.

The consultation document proposes amendments to the following Standards:

IFRS 9 Financial Instruments;

IAS 39 Financial Instruments: Recognition and Measurement;

IFRS 7 Financial Instruments: Disclosures;

IFRS 4 Insurance Contracts; and

IFRS 16 Leases.

The Exposure Draft is available below. The comment letter period is open until 25 May 2020.

The report can be accessed at https://www.ifrs.org

Exposure Draft: Interest Rate Benchmark Reform—Phase 2: Proposed amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16at following link:

https://cdn.ifrs.org/-/media/project/ibor-phase-2/ibor2ed2020.pdf

6. IESBA's proposes significant revisions to International Independence StandardsA. Proposed Revisions to the Non-Assurance Services Provisions of the Code:

The International Ethics Standards Board for Accountants (IESBA) has issued an Exposure Draft titled:Proposed Revisions to the Non-Assurance Services Provisions of the Code.

The ED on non-assurance services includes enhanced guidance to assist firms in evaluating the level of threats to independence when providing non-assurance services to audit client. Among the key changes proposed to the non-assurance services provisions are:

A prohibition on providing non-assurance services to an audit client that is a public interest entity (PIE) if a self-review threat to independence will be created;

Tightened the circumstances in which materiality may be considered in determining the permissibility of a non-assurance services;

Strengthened provisions regarding auditor communication with those charged with governance (TCWG), including, for PIEs, a requirement for non-assurance services pre-approval by TCWG; and

Stricter requirements regarding the provision of some non-assurance services, including certain tax and corporate finance advice.

The proposed revision can be assessed at:https://www.ethicsboard.org

B. Proposed Revisions to the FeeRelated Provisions of the Code

The International Ethics Standards Board for Accountants (IESBA) has issued an Exposure Draft titled:Proposed revisions to the fee-related provisions of the code.

The ED on Fees includes enhanced guidance on identifying, evaluating and addressing threats to independence in relation to other fee-related matters, including the proportion of fees for services other than audit to the audit fee. Among the key proposed changes to the fee-related provisions are:

A prohibition on firms allowing the audit fee to be influenced by the provision of services other than audit to the audit client;

In the case of PIEs, a requirement to cease to act as auditor if fee dependency on the audit client continues beyond a specified period; and

Communication of fee-related information to TCWG and to the public to assist their judgments about auditor independence.

The proposed revision can be assessed at https://www.ethicsboard.org

C. Proposed Revision to the Code Addressing the Objectivity of Engagement Quality Reviewers

The Exposure Draft includes proposed guidance on the application of the conceptual framework in the Code to address the topic of the objectivity of an engagement quality reviewer (EQR), thereby supporting proposed ISQM 2 in addressing the matter of the eligibility of an individual to serve in an EQR role. In particular, the proposed guidance:

Explains the different types of threat to compliance with the fundamental principle of objectivity that might be created in circumstances where an individual is being considered for

appointment as an EQR for a given engagement;

Sets out factors to consider in evaluating the level of the identified threats; and

Suggests actions that might be safeguards to address the threats.

The proposed revision can be accessed atwww.ethicsboard.org

7. IAASB PUBLISHES GUIDANCE ON AUDITOR CONSIDERATIONS RELATING TO GOING CONCERN IN LIGHT OF CHANGING ENVIRONMENT DUE TO THE COVID-19 PANDEMIC

On April 29, IAASB issued their official guidance on auditor considerations relating to going concern in light of changing environment due to the COVID-19 pandemic.

During the COVID-19 pandemic, audits should continue to comply with the required standards, which may necessitate different and enhanced considerations by auditors in the current circumstances. Auditors may need to consider developing alternative procedures to gather sufficient appropriate audit evidence to support their audit opinion, or to modify the audit opinion.

In response to the unprecedented global circumstances, the IAASB issued the following staff alerts to provide some guidance to auditors:

Going Concern in the Current Evolving Environment – Audit Considerations for the impact of COVID-19 at https://www.ifac.org/system/files/publications/files/IAASB-Staff-Alert-Going-Concern-April-2020.pdf

Highlighting Areas of Focus in and Evolving Audit Environment Due to the Impact of COVID-19at https://www.ifac.org/system/files/uploads/IAASB/Staff%20Alert%20-%20Audit%20Considerations%20Arising%20from%20Changes%20Due%20to%20Coronavirus.pdf

8. IAASB PROPOSES MODERNIZATION OF GROUP AUDITS STANDARD IN SUPPORT OF AUDIT QUALITY

The International Auditing and Assurance Standards Board (IAASB) released the exposure draft of proposed International Standard on Auditing (ISA) 600 (Revised), Special Considerations—Audits of Group Financial Statements (Including the Work of Component Auditors).

Proposed ISA 600 (Revised) deals with special considerations for audits of group financial statements (group audits). Group audits are often more complex and challenging than single-entity audits because a group may have many entities or business units across multiple jurisdictions, and component auditors may be involved.

The proposed standard introduces an enhanced risk-based approach to planning and performing a group audit. This approach appropriately focuses the group engagement team’s attention and work effort on identifying and assessing the risks of material misstatement of the group financial statements, and designing and performing further audit procedures to respond to those assessed risks. The proposed standard recognizes that component auditors can be, and often are, involved in all phases of a group audit. In these circumstances, the proposed standard highlights the importance of the group engagement team’s involvement in the component auditor’s work.

To ensure that International Standards on Auditing (ISAs) continue to provide a foundation for high-quality global audits, the IAASB Exposure Draft, ISA 600 (Revised), Special Considerations—Audits of Group Financial Statements (Including the Work of Component Auditors), proposes more robust requirements and enhanced guidance that:

• Clarifies the scope and applicability of the standard.

• Emphasizes the importance of exercising professional skepticism throughout the group audit.

• Clarifies and reinforces that all ISAs need to be applied in a group audit through establishing stronger linkages to the other ISAs, in particular to proposed ISA 220 (Revised), ISA 315 (Revised 2019) and ISA 330.

• Reinforces the need for robust communication and interactions between the group engagement team, group engagement partner and component auditors.

• Includes new guidance on testing common controls and controls related to centralized activities.

• Includes enhanced guidance on how to address restrictions on access to people and information.

• Enhances special considerations in other areas of a group audit, including materiality and documentation.

In consideration of COVID-19’s impact, the IAASB is departing from the Board’s normal 120-day comment period for public consultations. Therefore, the exposure draft of proposed ISA 600 (Revised) is open for public comment until October 2, 2020.

The IAASB invites all stakeholders to comment on the Exposure Draft via the IAASB’s website.

The report can be accessed at:

https://www.iaasb.org/news-events/2020-04/iaasb-proposes-modernization-group-audits-standard-support-audit-quality

9. NON-AUTHORITATIVE SUPPORT MATERIAL: AUDIT DOCUMENTATION WHEN USING AUTOMATED TOOLS AND TECHNIQUES

The Technology Working Group (TWG) of the International Auditing

and Assurance Standards Board (IAASB) published non-authoritative support material related to the auditor’s documentation when using automated tools and techniques (ATT), such as data analytics, robotics automation processes or artificial intelligence applications.

The publication assists auditors in understanding how the use of ATT during an audit engagement may affect, if at all, the auditor’s documentation in accordance with International Standard on Auditing (ISA) 230, Audit Documentation, and the documentation requirements of other relevant ISAs.

The guidance can be accessed at:

https://www.iaasb.org/publications/non-authoritative-support-material-audit-documentation-when-using-automated-tools-and-techniques

The following guidelines are issued and published on COVID 19 by SAARC CA Bodies:

10. GUIDELINE ISSUED BY CA SRI LANKA ON IMPLICATIONS ON AUDITORS COVID 19 EPIDEMIC AT:

https://www.casrilanka.com/casl/index.php?option=com_content&view=article&id=3154%3Acovid-19-pandemic-guidance-notes-on-the-implications-on-auditing&catid=1%3Ageneral-latest&lang=en

11. GUIDELINE ISSUED BY CA PAKISTAN ON PREPARATION OF FINANCIAL STATEMENTS UNDER THE COVID-19 CIRCUMSTANCES AT:

https://www.icap.net.pk/wp-content/uploads/2020/04/Preparation-of-Financial-Statements-under-the-COVID-19-Circumstances.pdf

12. GUIDELINE ISSUED BY CA PAKISTAN ON ‘THE IMPACT OF COVID-19 ON AUDIT – A GUIDANCE FOR AUDITORS’ AT:

https://icap.net.pk/wp-content/uploads/2020/04/Impact-of-COVID19-AuditGuidance.pdf

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1. IASB decides on new effective date for IFRS 17 on or aftert 1 January 2023The International Accounting Standards Board (Board) has decided that the effective date of IFRS 17 will be deferred to annual reporting periods beginning on or after 1 January 2023. The Board also decided to extend the exemption currently in place for some insurers regarding the application of IFRS 9 Financial Instruments to enable them to implement both IFRS 9 and IFRS 17 at the same time.








































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Published by the Editorial Board of the Council, The Institute of Chartered Accountants of Bangladesh (ICAB)100 Kazi Nazrul Islam Avenue, Dhaka 1215; Tel. +8809612612100, +880-2-9115340, Fax: +880-2-9125266, E-mail: [email protected], Website: www.icab.org.bd

ObituaryMr. Mohammed

Mashir Alam FCA

(Enrl. No. 628)

passed away on 18

March 2020 at the

age of 56 at his

residence. (Inna

Lillahe Wa Inna Illahe

Rajeun).

On behalf of the

Council of ICAB,

P r e s i d e n t

Muhammad Farooq FCA expressed condolence to the

bereaved family and sought eternal peace to the departed

soul.

Mohammed Mashir Alam FCA

Request for Membership of ICAB Members’ Welfare

Foundation (IMWF)ICAB Members’ Welfare Foundation (IMWF) has been

formed by ICAB for the benefit and welfare of the

members of ICAB.

Respected members are requested to kindly collect

registration form and send filled in form to the ICAB

Secretariat alongwith a crossed cheque/Pay Order/ DD

of Tk. 25,000 (Taka twenty five thousand) only as

membership admission fee in favour of ‘ICAB Members

Welfare Foundation.’

Workshop on Practical Demonstration of Audit

MaterialityWorkshop on ‘Practical Demonstration of Audit Materiality, Journal Entry Testing, Audit Sampling and Opening Balances’ was held at ICAB training room on 4 March 2020. Practicing members and directors, senior managers of CA firms participated in the workshop. Ali Amjad Choudhury FCA, Partner, Howladar Yunus & Co., Chartered Accountants was the resource person.

ICAB Writes to NBR for the Time Extension of

Submitting Monthly VAT, Tax Returns of Cos

ICAB writes to National Board of Revenue (NBR) for the extension of submission of return of companies and firms with waivering penalty and interest as the country is undergoing nationwide shutdown due to pandemic COVID-19. All government and private offices have been remained closed for a long time. In this situation it is not possible to prepare monthly statement are forced to remain close as declared. Concerned officials of firms and companies are enjoying general holidays as declared by the government for combating corona virus to save lives of people from being affected with the deadly discase.

In this circumstances, ICAB urged NBR in a letter to extend the time of the submission of monthly return of company’s VAT and tax by 15th and 20th June 2020 respectively. ICAB citied neighbouring country’s example in this regard.

Shahadat Participated in the Discussion on Birth Centenary

of Bangabandhu at FRCCAB Council Member & Ex-Vice President Md. Shahadat Hossain

FCA participated in a discussion marking birth centenary of

Bangabandhu Sheikh Mujibur Rahman. The session was organized by

the Financial Reporting Council (FRC) on 17 March 2020 at FRC premise.

As main speaker Mr. Hossain in his speech highlighted the economic

advancement after the liberation war during the 1971-75 and the vision of

Bangabandhu for economic emancipation of the country.

Financial Reporting Council (FRC) ChairmanCQK Mustaq Ahmed,

Executive Director, Financial Report Monitoring Division, Mohammad

Mohiuddin Ahmed FCA and Executive Director, Audit Practice

Review Division Md. Sayeed Ahmed, FCA were present.

I

Documents

Monthly News Brieﬁng from the Institute of Chartered ... · Monthly News Brieﬁng from the Institute of Chartered Accountants of Bangladesh (ICAB) ICAB NEWS BULLETIN Number 364