THE statutory audit of financial statements — mandated by law — is a critical function to ensure transparency, accountability and stakeholder confidence. Globally, the right to perform statutory audits is restricted to professionals who meet rigorous legal, technical and ethical standards, often under a formal ‘charter’ or licensing regime.
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Understanding the title ‘chartered’
INTERNATIONALLY, the term ‘chartered accountant’ holds legal and professional significance. Originating from the concept of a ‘Charter’ — a formal document issued by a sovereign authority — the title confers a distinct legal authority to perform certain reserved functions, including statutory audits. Countries like the UK, Canada, Australia, India, and Bangladesh, all follow this model where statutory audit rights are reserved for chartered accountants (CAs).
Bangladesh, in alignment with global best practices, currently permits only chartered accountants, regulated by the Institute of Chartered Accountants of Bangladesh, to conduct statutory audits.
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Cost and management accountants
THE Cost and Management Accountants of Bangladesh, or CMAs, are professionals with expertise in costing, budgeting and internal financial management. Their role is indispensable in strategic planning, internal control and cost optimization. However, by name, structure and regulatory mandate, they are not granted the authority to perform statutory audits, nor do they carry a chartered designation.
The demand by CMAs to be included in the statutory audit framework raises several fundamental questions:
- Do CMAs possess practical audit training equivalent to CAs?
- Are they institutionally equipped with standards, oversight and disciplinary mechanisms required for public assurance?
- Does global precedence support such inclusion?
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Audit and accounting are not interchangeable
AUDITING begins where accounting ends. While accounting involves the preparation of financial information, auditing is the independent examination of that information under a legal and ethical framework. This distinction is vital. Possessing accounting knowledge does not equate to auditing expertise.
Cost and management accountants, while well-versed in accounting and cost management, lack structured and practical training in statutory auditing as mandated by globally recognised auditing standards (eg, ISA, ISQC, IESBA Code of Ethics).
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Practical gaps in the field: the role of CMAs
CMAs are currently engaged in key financial positions across corporate and public sectors. It is expected that professionals in such roles should ensure full compliance with IFRS and local GAAP, maintain proper books of accounts, and contribute to financial integrity at the entity level.
However, it is evident that numerous local entities and state-owned corporations still fail to comply with IFRS (International Financial Reporting Standards), with annual returns and tax filings remaining grossly deficient and audit opinions issued by CAs frequently containing material qualifications that go unaddressed by management — where CMAs often serve as CFOs.
Rather than demanding audit rights, CMAs should focus on enhancing financial reporting standards, thereby complementing the work of auditors and improving the ecosystem as a whole.
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Regulatory and ethical concerns
It must be noted that in bank audits, regulatory compromises by the Bangladesh Bank — such as provision shortfalls for bad loans — are undermining audit integrity. Yet, CMAs, many of whom serve in key bank roles, remain silent. If the Cost and Management Accountants of Bangladesh is committed to ethical financial practice, it should raise concerns about such systemic issues rather than advocating for statutory audit rights without basis.
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Global precedents
Across the world, statutory audits are entrusted to specific categories of professionals regulated by designated bodies or laws. In the United States, certified public accountants carry out statutory audits under the oversight of the AICPA and PCAOB. In the United Kingdom, chartered accountants — such as ACAs and ACCAs — are regulated by the FRC and ICAEW. Canada entrusts the task to chartered professional accountants under CPA Canada, while in India and Bangladesh, chartered accountants conduct statutory audits under the supervision of the ICAI and ICAB respectively. Germany requires wirtschaftsprüfer, or public auditors, who are governed by the WPK, whereas in Japan, Japanese CPAs operate under the JICPA. In Australia, registered company auditors are regulated by ASIC, and in South Africa, registered auditors, typically chartered accountants, are overseen by the IRBA. In China, statutory audits are performed by Chinese CPAs under the regulation of CICPA.
Across all major jurisdictions, statutory audit is the domain of chartered or similarly licensed audit professionals, not general accounting practitioners. CMAs, ACCAs, CFAs, and other financial professionals are not authorised for statutory audit roles, despite their valuable contributions in other capacities.
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A call for role integrity
WHILE the contribution of CMAs to the financial ecosystem is noteworthy, statutory audit requires a specialised mandate, supported by globally recognised frameworks and public oversight.
The Cost and Management Accountants of Bangladesh should focus on strengthening financial discipline and internal controls within organisations, thereby indirectly enhancing the quality of audits conducted by chartered accountants. Rather than advocating for statutory audit rights — without precedent or foundational capacity — it would be prudent for the CMAB to collaborate with ICAB in building a robust, transparent and accountable financial system.
Respecting professional boundaries ensures public trust. Diluting them, however, risks systemic collapse.
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Shaikh Ashafuzzaman is a practising chartered accountants, an independent director and chairman, audit committee, Bangladesh Commerce Bank.
