Assignment - 1

Course Title: Auditing

Section: A
Semester Name: Fall 2020
Submitted by:
Name: Abdullah Al Fahad
Id: 111 171 171
Department: BBA

Submitted To
Mohammad Tariq Hasan (MTH),
Asst. Professor
United International University

Date of Submission: 13 dec, 2020

Bank is well known as a monetary institute but Bank did not establish in a day. When currency
introduced as an exchange term, human life has been trouble-free that they can exchange
anything between them using money. Also business and trading have been introduced. In 1972
when Bangladesh became liberated, the Banking sector was in shatters. Lot of Banks branches
during the liberation time were burnt & destroyed. In view of the above, government of the
newly independent Bangladesh had to take some quick decisions. A central Bank namely
Bangladesh Bank had to be created taking over the assets & liabilities of State Bank of Pakistan
located in Bangladesh area Banking sector of Bangladesh has undergone dramatic changes since
the independence in 1971.Immediately after liberation the government nationalized all banks.
There are approximately 4 nationalized, 29 local and 10 foreign commercial banks in Bangladesh
and SEBL is one of them. Under the above backdrop SEBL is a private sector bank having a
small market share of the industry. If the weaknesses are addressed appropriately and
opportunities are explored keeping in view the threats behind with a stable and professional
management having regard to appropriate corporate governance and modern automation
technology, then SBL could expect to achieve its desired target of a visionary bank. Southeast
Bank Limited is a fast growing modern banking institution having a unique corporate culture &
friendly working environment which unites our people towards achieving tremendous results in
every aspect of Bank’s operations. Southeast Bank Limited is a second generation leading
private commercial Bank in the country with a vision to be the leading financial institution in the
country having a diverse array of carefully tailored customer friendly products and financial
services in the Bank which unites our people and results in continuous growth in every aspect of
Bank’s operations.

Feature of the audited annual report

 Notice of annual general meeting: The annual report of Southeast bank Limited contains
the “Notice of the 24th Annual General Meeting”. The notice encloses the meeting agenda
 such as dividend approval, appointment of auditors and election of directors. The notice also
informs about the record date and notable rules relating to the meeting.
 Vision, mission, objective: The report reflects on the vision, mission and objective of the
company.
 Performance at a glance: This segment reports key financial performance indicators
including net turnover, gross profit, operating profit, net profit before tax and net profit after
tax of the concerned accounting period and that of the preceding year to expedite
performance comparison.
 Corporate directory: This part in essence is the overview of the company that outlines the
location, nature of operation, affiliations, notable dates, management, audit, legal and
corporate structure and other directives of the company.
 Five years financial highlights: This part is the presentation of 5-years’financial data
extracted from the statement of financial position and statement of profit or loss and other
comprehensive income.
 Introduction to the directors: The segment contains the biography of the chairman,
directors, managing directors and independent directors.
 Message from the chairman: Traditionally, all annual reports contain a message of the
chairman addressed towards the shareholders acknowledging the annual general meeting.
The chairman’s statement in the annual report of Southeast Bank Limited referred to matters
as the summary of the general trading conditions over the financial year in light of the
economic condition, the overall strategy and plans of the company for the future and brief
financial data like amount of net turnover, net profit after tax etc.
 Message from the managing director: Generally in this segment, the managing director
recounts the current expansion and investment undertakings and outlines the future prospect
of the business in the light of the internal and external environment of this bank.
 Report of the board of directors: The report of the board of directors, inter alia, contains
description of principal trading activities and overall bank review, in a manner that is concise
and intelligible to the users of annual report.
 Audit report: This report contains the opinion of independent auditors of financial statement
and the underlying basis of such opinion.
 Audited Financial statements: This segment is comprised of the statement of financial
position, statement of profit or loss and other comprehensive income, statement of changes in
equity, statement of cash flows and notes and disclosures of issues related to the information
provided in such statements.

Critical evaluation of Audit report

The independent auditor’s report of Southeast Bank Limited is design a critical evaluation of the
report on audit of the financial statements. This report is addressed to the shareholder of the
company.

In the introductory paragraph the auditors disclosed these two core information- who is being
audited and what is being audited including the period. The auditors stated that they are auditing
Southeast Bank Limiteds financial statements for the accounting period ending at 31 Dec, 2018.

It can be observed that the second paragraph of the auditor’s report contains the opinion
paragraph. The auditor have expresses a qualified opinion. The auditors have given a qualified
opinion and to imply that the overall financial statement is fairly stated in all material respects in
accordance with the established criteria i.e. ISAS.

In the subsequent paragraph the auditors discuss the reason for their qualified opinion. They
discuss about provision for loans and advances.

The fourth paragraph of this report discusses the scope of the audit. The auditors set out the
standard that guided their audit procedures, which is the International Standards on Auditing
(ISAs) in this case. The auditors then proceeded with stating that they have accumulated
evidence that they believe is relevant, reliable and sufficient to provide a reasonable opinion.
In the next few paragraphs the auditor describes the key audit matters and the corresponding the
audit procedure and evidence for such matters. This implies that auditors are responsible to look
into material aspects of financial statements.

In the following few paragraphs the auditors clarified their responsibilities and that of the
management. To summarize, the auditors stated that the onus of fair presentation of financial
statement, assessment of going concern and disclosure of information lies with the management.
They mentioned that auditors provide no assurance for any information provided in the annual
report other than the financial statements. They described that the responsibility of the auditors is
to obtain reasonable assurance that the financial statement are free from material misstatement,
which is not to be mistaken as guarantee by the users. They reiterated that they have performed
their duties in accordance with ISA.

In the final paragraph the auditors reported, in correspondence with Companies Act 1994 and
Securities and Exchange Rules 1987, that they have exercised professional care in the audit from
which it was apparent that the company maintained proper books of accounts and the financial
statements agree with such, and that the expenditures were incurred in the operation of the
business.

The audit report closes with the name of the chartered accountant firm- Pinaki Das FCA. Pinaki
and company, charter accounts. and the date-30 April, 2019 signifying the last date of their
responsibility.

Feature of compliance report of CG code

They examined the compliance status to the Corporate Governance Code by Southeast Bank
Limited for the year ended on December 31, 2018. According to the opinion auditor Southeast
Bank limited has agreed to the states of the Corporate Governance Code. The Financial
Reporting Act, 2015 (FRA) has been enacted in 2015. Under the FRA, the Financial Reporting
Council (FRC) is to be formed and it is to issue financial reporting standards for public interest
entities such as banks. Section 38 of the Bank Companies Act, 1991 has been replaced in 2015
by two new subsections to require banks to prepare their financial statements under such
financial reporting standards. The FRC is yet to be formed and as such no financial reporting
standards have been issued as per the provisions of the FRA. Hence, considering Section 69 of
FRA, the consolidated financial statements of the Bank and its subsidiaries and the separate
financial statements of the Bank as at and for the year ended 31 December 2018 have been
prepared in accordance with International Financial Reporting Standards (IFRSs) and the
requirements of the Bank Companies Act, 1991 the rules and regulations issued by Bangladesh
Bank (BB), the Companies Act, 1994, the Securities and Exchange Rules, 1987, The Income Tax
Ordinance, 1984, The Value Added Tax, 1991. In case any requirement of the Bank Companies
Act, 1991 and provisions and circulars issued by BB differ with those of IFRSs, the requirements
of the Bank Companies Act, 1991.