The Financial Reporting Act, Cost Audit and Implications for the Cost Auditors’ Professional Accountancy Institute

The paper has given an overview of the origin and objectives of the Financial Reporting Act 2015 (FRA) with an unofficial English version thereof. Then it highlights on the cost audit under the FRA, which is included in the statutory definition of “audit service” to be conducted by practicing cost and management accountant (CMA) after being enlisted in accordance with the provisions of Chapter V of the FRA. Thereafter, the paper broadly covers the legal provisions in the FRA on professional accountancy institutes (PAIs) with special focus on the Institute of Cost and Management Accountants of Bangladesh (ICMAB) being one of the two PAIs and the cost auditors' PAI. Accordingly, under the FRA, ICMAB has a number of responsibilities and obligations including taking punitive measure against the enlisted cost auditor for punishment by the Financial Reporting Council (FRC); ensuring the public interest-related oversight through taking effective measures in association with the FRC; giving consultation and assistance to the FRC for setting standards, making rules or regulations. There are also some implications of the FRA on ICMAB or its members or cost audit practice including ICMAB's punishment to any of its members to disqualify him to be FRC's Chairman or Executive Director; FRC's Audit Practice Review Division's observance of ICMAB's activities regarding cost audit practice; cost audit practice to be unauthorized while ICMAB's action under disposal on FRC's enforcement recommendation; and enlisted cost auditor to intimate the FRC, ICMAB or concerned regulator about PIE's inaction on severe irregularity within prescribed time. The paper concludes with an expectation that the cost audit would ultimately flourish with its full potential under the FRC's oversight and enforcement regime due to its fundamental obligation is to develop the accounting as well as cost and management accounting profession