Introduction
The financial system is the process within a company organization that records and maintains
financial records to extract valuable information for their respective decision making. There is a
need to gain a better understanding of their financial system. The most important financial job is
Accounting auditing which is the process of ensuring that the legal financial system is free of
flaws. Auditing is primarily required to demonstrate the system's legality and accountability.
Various aspects of the financial system, as well as the auditing program, will be covered in depth
in the following report. To retain legality in their accounting systems, organizations adhere to the
legal framework. In this report, at first, there will be given a comparison of three consecutive
years audited statements of each company to identify the changes of the auditing and accounting
policies and then there will be compared the six companies audited statements to show how the
auditing and accounting policies differ from each other. For this, there has been chosen six
companies which are- Eastern Cables, Prime Bank Ltd., Lanka Bangla Finance, Fu-wang Food,
National Life Insurance, and Ibn Sina Pharmaceutical.
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Overview of the Organisation
Prime Bank was established in April 1995 by a group of committed and visionary entrepreneurs
who conceived an idea of floating a commercial bank with a different outlook. Prime Bank is
prominent for its superior service quality, brand image, strong corporate governance and
corporate culture. Its subsidiaries are Prime Bank Investment Limited, Prime Bank Securities
Limited, Prime Exchange Co. Pte Ltd (Singapore), PBL Exchange (UK) Limited PBL Finance
(Hong Kong) Limited. Below given the changes that have been made during the three
consecutive years 2018, 2019, and 2020 of accounting and auditing policies.
Figure: Prime Bank Limited Logo
Changes in Accounting principles and policies
Particulars 2018 2019 2020
Translation gains The resulting Same as 2018. The resulting
and losses exchange transaction exchange transaction
gains and losses are gains and losses are
included in the profit included in the profit
and loss account, and loss account.
except those arising
on the
translation of net
investment in the
foreign subsidiary.
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Basis of Accrual Basis Accrual Basis Accrual Basis
measurement
Investments in Investment in Same as 2018 Investment in
subsidiary subsidiaries is subsidiaries is
accounted for under accounted for under
the cost method of the cost method of
accounting in the accounting in the
Bank's financial Bank's financial
statements in statements in
accordance with the accordance with the
IFRS-10. IAS-27.
Depreciation Depreciation is Same as 2018 Same as 2018
charged for the year
at the following rates
on reducing balance
method on all fixed
assets other than
vehicles, software
and all fixed assets of
ATM-related on
which straight-line
depreciation method
is followed and no
depreciation is
charged on land.
Additional to For additions during For additions during For additions during
depreciation the year, depreciation the year, depreciation the year, depreciation
is charged for the is charged for the is charged from the
remaining days of the remaining days of the date of recognition to
year and disposal year and disposal the remaining days of
depreciation depreciation the year and for
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is charged up to the is charged up to the disposal, depreciation
date of disposal. date of disposal. is charged up to the
date of disposal
Lease Lease is classified as Lease is classified as Same as 2019
per the BAS-17 per the IFRS-16
EPS 2.01 1.17 1.61
After the analysis of the consecutive three years financial statements of Prime Bank Ltd., it can
be said that there are no significant changes made in the major asset’s principles during the years
except translation gains and losses, investment in subsidiaries, depreciation, and lease.
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Changes in Auditing principles and policies
Particulars 2018 2019 2020
Audit opinion type Modified Modified Unmodified
Audit Report Qualified Qualified Unqualified
Name of the Aziz Halim Khair Aziz Halim Khair Aziz Halim Khair
Auditors Choudhury, Choudhury, Choudhury,
Chartered Chartered Chartered
Accountants, and Accountants, and Accountants, and
Hoda Vasi Hoda Vasi Hoda Vasi
Chowdhury & Co. Chowdhury & Co. Chowdhury & Co.
Chartered Chartered Chartered
Accountants Accountants Accountants
Number of
independent editors
Auditors report International International International
standards Standards on Standards on Standards on
Auditing (IASs) Auditing (IASs) Auditing (IASs)
Basis of audit report International Ethics Same Same
Standards Board for
Accountants’ Code of
Ethics for
Professional
Accountants (IESBA
Code), Bangladesh
Securities and
Exchange
Commission (BSEC)
and Bangladesh
Bank, and
IESBA Code and the
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Institute of Chartered
Accountants of
Bangladesh (ICAB)
Auditors fee 1380000 1380000 1380000
Percentage of Audit 0.063% 0.077% 0.083%
fee
Consolidated 2800850 2939411 3070109
auditor’s fees
Audit fee presented In administrative In administrative In administrative
expense. expense. expense.
Auditors opinion Given a true and fair Given a true and fair Given a true and fair
value. value. value.
Audit Evidence Sufficient and Sufficient and Sufficient and
appropriate appropriate appropriate
Evaluation The statements reflect The statements reflect The statements reflect
a true and fair view a true and fair view a true and fair view
Measurement of N/A N/A Given significant
provision for loans, importance.
advances and leases
Implementation of N/A Given significant Given significant
IFRS 16 Leases importance. importance.
Covid-19 N/A N/A Given significant
importance.
Management The Management is Same Same
Responsibilities also required to make
a self-assessment on
the effectiveness of
anti-fraud internal
controls and report to
Bangladesh Bank on
instances of fraud and
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forgeries.
Auditor’s To obtain reasonable Same Same
responsibilities assurance about
whether the
consolidated and
separate financial
statements as a whole
are free from material
misstatement,
whether due to fraud
or error and to issue
an auditor’s report
that includes their
opinion.
Key terms should be mentioned-
The emphasis of matter- In 2020, the Bank disclosed that the revaluation of its land and building
was conducted in2008 and 2013. In our opinion, the Bank was not in compliance with the
provisions of para-31 and 34 of International Accounting Standard-16 which did not happen in
2018 and 2019.
Measurement of provision for loans, advances and leases- In 2020, the bank has focused on
the following significant judgements and estimates which could give rise to material
misstatement or management bias- Completeness and timing of recognition of loss events by
criteria set out in relevant BRPD Circulars issued by Bangladesh Bank; For individually assessed
provisions, the measurement of the provision may be dependent on the valuation of collateral,
estimates of exit values and the timing of cash flows. This type of probable misstatement has not
been arising in 2018 and 2020.
Implementation of IFRS 16 Leases- In 2019, the auditors considered it as a key audit matter
to focus on all leasing arrangements within the scope of IFRS 16 are identified and appropriately
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included in the calculation of the transitional impact and specific assumptions applied to
determine the discount rates for lease are inappropriate. On the other hand, in 2020, IFRS 16
Leases has become effective for annual reporting beginning on or after 01 January 2019, which
replaced the earlier standard IAS 17 Leases. The Group implemented the IFRS 16 and
recognized the right of use asset and lease liabilities from 01 January 2019. As the
implementation of IFRS 16 provisions is of complex and voluminous nature and is significant to
the Group’s preparation of financial statements, we have considered it as a key audit matter.
Covid-19- The COVID-19 outbreak has developed rapidly in 2020, with a significant number of
infections across the world and affecting economic activities enormously. As a result, going
concern risk might arise and the assets of the Bank might be impaired.
Management Responsibilities- In the three consecutive years, Management is responsible for
the preparation and fair presentation of the consolidated financial statements of the Group and
also separate financial statements of the Bank in accordance with IFRSs, and for such internal
control as management determines is necessary to enable the preparation of consolidated and
separate financial statements that are free from material misstatement, whether due to fraud or
error. The Bank Company Act, 1991 and the Bangladesh Bank Regulations require the
Management to ensure effective internal audit, internal control and risk management functions of
the Bank. The Management is also required to make a self-assessment on the effectiveness of
anti-fraud internal controls and report to Bangladesh Bank on instances of fraud and forgeries. In
preparing the consolidated and separate financial statements, management is responsible for
assessing the Group’s and the Bank’s ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis of accounting
unless management either intends to liquidate the Group and the Bank or to cease operations, or
has no realistic alternative but to do so.
Auditors responsibilities- In the three consecutive years, their objectives are to obtain
reasonable assurance about whether the consolidated and separate financial statements as a
whole are free from material misstatement, whether due to fraud or error and to issue an
auditor’s report that includes their opinion.
After audit judgements of the auditors in 2020, 2019, and 2018-
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In their opinion, proper books of account as required by law have been kept by the Group
and the Bank so far as it prepared from our examination of those books;
The records and statements submitted by the branches have been properly maintained and
consolidated in the financial statements;
The consolidated balance sheet and consolidated profit and loss account together with the
annexed notes dealt with by the report agree with the books of account and returns;
The expenditures incurred were for the Bank’s business for the year;
The consolidated financial statements have been drawn up in conformity with prevailing
rules, regulations and accounting standards as well as related guidance issued by
Bangladesh Bank;
Adequate provisions have been made for advance and other assets which are in our
opinion, doubtful of recovery;
The information and explanations required by us have been received and found
satisfactory;
They have reviewed over 80% of the risk-weighted assets of the Bank and spent over
7,000 person-hours; and
Capital to Risk-weighted Asset Ratio (CRAR) as required by Bangladesh Bank has been
maintained adequately during the year.
So, at last, it can be said that Prime Bank Ltd has been maintained all the accounting and
auditing policies and principles properly during the operating time.
