(Epss) in Bangladesh Page 27
Total Page：16
File Type：pdf, Size：1020Kb
VOLUME XLII NUMBER 1 JANUARY-FEBRUARY 2014 Impact of Internal Control on the Extent of Audit Procedures: Evidence from the Banking Sector of Bangladesh page 04 Modes of E-Payment Systems (EPSs) in Bangladesh page 27 ECAIs for Banks and Financial Institutes- a New Dimension for Capital Adequacy Management Under Basel-II page18 The Institute of Cost and Management Accountants of Bangladesh (An autonomous professional institution under the Ministry of Commerce, GOB) Bi-monthly Journal of the ICMAB ISSN 1817-5090 ■ VOLUME XLII ■ NUMBER 01 JANUARY- FEBRUARY 2014 Content 01 Editorial 02 From the desk of the PRESIDENT 04 Editor Prof. Dr. Md. Abdul Hannan Mia FCMA Impact of Internal Control on the Extent of Associate Editors Mr. Naba Krishna Muni FCMA Audit Procedures: Evidence from the Banking Mr. Md.Touhidul Alam Khan ACMA Sector of Bangladesh Journal and Publication Committee Chairman Prof. Dr. Md. Abdul Hannan Mia FCMA 18 Vice-Chairman Mr. Nikhil Chandra Shil ACMA External Credit Assessment Instruments Members Mr. Arif Khan FCMA Services for Banks and Financial Institutes- a Mr. Jamal Ahmed Choudhury FCMA New Dimension for Capital Adequacy Mr. Md. Abdur Rahman Khan FCMA Mr. Muzaffar Ahmed FCMA Management Under Basel-II Mr. M. Abul Kalam Mazumdar FCMA Prof. Mamtaz Uddin Ahmed FCMA 27 Mr. A. K. M. Delwer Hussain FCMA Modes of E-Payment Systems (EPSs) in Mr. Md. Mamunur Rashid FCMA Prof. Dr. Swapan Kumar Bala FCMA Bangladesh: A Review of Literature Mr. Ahsanul Bari FCMA Mr. Mohammad Golam Sabur FCMA 41 Mr. Md. Rafiqul Islam FCMA Mr. C. M. Sadat Ullah FCMA Corporate Social Responsibility of Telecom Mr. Mohammad Shafiul Qasem FCMA Industry in Bangladesh Mr. Mohammed Salim Raza ACMA Chowdhury Sazzed Hossain Siddique ACMA Mr. Mohammad Shamsur Rahman ACMA 49 Mr. Mohammad Ali Ikramul Kabir ACMA Applicability and Decision Usefulness of Fair Mr. Mohammad Ruhul Quddus ACMA Value Accounting in Measuring Non-Current Kazi Simum Reza ACMA Assets Mr. Mohammed Sakhawat Hossain ACMA Mr. Md.Touhidul Alam Khan ACMA Syed Mehedi Hasan ACMA 58 Mr. Safiul Azam ACMA Do Managers' Thoughts Reflect in the Dividend Mr. Md. Aktaruzzaman ACMA Decision in Bangladesh? Secretary Mr. Mohammad Mizanur Rahman Deputy Director (Publication) 70 Publisher Mr. A.K.M. Nazrul Islam FCMA Executive Director, ICMAB Formation of Functional Commttees All supervision Mr. Mohammad Mizanur Rahman 74 Photography Mr. Md. Moslem Uddin ICMAB News Design & Print Orchi Logistics 159, Arambag(1st floor), Motijheel, Dhaka 1000. 85 Editorial Office The Institute of Cost and The ICMAB Council 2014 Management Accountants of Bangladesh ICMA Bhaban, Nilkhet, Dhaka-1205. GPO Box No. 2629 96 Tel.: 9615460 & 9611799 Member's Achievement [email protected] [email protected] All rights reserved.No part of this publication may be reproduced,duplicated or copied by any means without the prior consent of the holder of the copyright,requests for which should be addressed to the publisher. Bi-monthly Journal of the ICMAB ISSN 1817-5090 ■ VOLUME XLII ■ NUMBER 01 JANUARY- FEBRUARY 2014 Editorial There is Always Someone to Rate You! Our personal, social, political, above all business life, nowadays, is full of uncertainty that yields risk and reward. Since uncertainty cannot be eliminated, our goal is to minimize the risk and to optimize the rewards. This only can be done through crafting and implementing appropriate strategy by analyzing our strength, weakness, opportunity and threat. Failure to do so has no outcome other than crunch-an unwanted destiny as evident by world big corporate scandals. After some scam in financial and non-financial sectors, concerned authorities are having increased vigilance over the selection of borrowers, suppliers and techniques of monitoring their activities. For this purpose, all entrepreneurs should have adopted appropriate mechanism of evaluating their capabilities long before they are in a crisis. Followed by corporate scandals, micro and macro authorities have developed various measures including preventive and surgical measures like credit rating and seizing licenses. Based on the need for evaluating oneself, public and private initiatives have been assuming the role of "go-between" and "between taker"-an entrepreneurial role of the third party. The emergence of credit rating agency in home and abroad are the instance of such need. According to this development the borrower have to submit an assessment of performance by an External Credit Assessment Institutions (ECAIs). In Bangladesh, banks now follow three pillars under BASEL II for the purpose of bringing discipline in the banking sector. In this regard, ECAIs play a significant role in the standardized approach and securitization framework of prudential regulation through the mapping of each of their credit assessments to the corresponding risk weights. An ECAI should be independent of political, social and economic pressures so as to ensure impartial rating. The assessment process should be free from theoretical and practical constraints that could arise in situations where the composition of the board of the client organizations and the ECAIs may be seen as the parties of same or conflicting feather. An ECAI should disclose the information of its assessment methodologies, including the definition of default, the time horizon, and the meaning of each rating; the actual default rates experienced in each assessment category; and the transitions of the assessment, e. g. the likelihood of increasing or decreasing a rate over time in a given scenario. ECAIs should publicly disclose its credit assessment methodologies, assessment results for healthy competition towards economic development. The top-most priority should be given on increasing the effectiveness of supervisory activities. One of the important indicators of financial soundness and stability of financial institutions is their capital adequacy. So, necessary steps must be taken for implementing the policies related to capital adequacy under Basel II and Basel III in the near future. Although Bangladesh Bank is giving much attention in this area, yet we need to be more vigilant and increase our supervision and monitoring activities in this regard. In order to mitigate the risks of the financial and non-financial institutions and to face the possible challenges, suitable guidelines for structured risk management must be developed and put in place. But observation remains! Did USA solve all corporate scandal through SOX 2002? Did implementation of Basel II & III solve banks' problems? Did corporate governance guidelines and implementation thereof resolved corporate problems? Are these the panacea? The answer is 'NO'. These problems only can be resolved by transforming our corrupt heart to a responsive and eventually to an ever satisfying soul through culminating cemented fear of Almighty simply because all soul must return to HIM. THE COST AND MANAGEMENT 01 ISSN 1817-5090, VOLUME-42, NUMBER-1, JANUARY-FEBRUARY 2014 PRESIDENT Dear Respected Members of CMA Profession, AsslamuAlaikum, I am delighted and honored being elected the President of our prestigious Institute, ICMAB, for the year 2014. I know being honored means being involved means assuming moreresponsibilities to fulfill the expectation of the stake holders. Insullah, with the support of our members, dynamic Council and ICMAB staff members' team we will play our role to fulfill the need of the day. Dear members, it is the age of disruptive technology that brings sweeping change in the industry and market place. We are aware of the change in accounting profession that took place during last decade both nationally and globally. Change in the thought process of the accountants, their career portfolio diversification, enrichment and enlargementof accounting jobs, standardization of global financial reporting and the tendency of collaboration of the global the global accounting bodies and ICT based reporting etc. are some of the driving forces in our profession. Keeping these in mind, we will develop our strategy to materialize our dream of making ICMAB a global reputed institution. Among others our priority strategies would include digitizing professional services, updating education, ensuring members' continuous professional development, mutual recognition etc. towards the pursuit of our dream to be true. With your kind cooperation and support, I am confident; we shall overcome the challenges ahead to materialize this dream. Being involved in ICMAB council for long, I have witnessed how our past Presidents have endeavored to grow our Institute and to contributed to promote the cost and management accounting profession in the country. I personally have benefited myself from such involvement and learned from their hard work and achievements. Now the responsibilities have shouldered upon me as the candle bearer of the CMA profession. I must not only keep the pace of these development but outcompete traditional development to ensure a better place in the global professional arena. As we all know, the management accounting profession has experienced dramatic changes in recent years and has also played a more significant role in the moderndeern business environment than before. New and innovative management accounting THE COST AND MANAGEMENT 02 ISSN 1817-5090, VOLUME-42, NUMBER-1, JANUARY-FEBRUARY 2014 Now,ow, itit isis thethe timetime toto taketake thethe responsibilityresponsibility toto conductconduct needneed basedbased researchresearch inin orderorder toto bringbring thethe desireddesired changechange