Adoption of International Financial Reporting Standards in Bangladesh: Benefits and Challenges

Abstract

The study focuses on the recent adoption status of International Financial Reporting Standards (IFRS) in a developing economy like Bangladesh. The objectives of this paper are to identify the development of the accounting profession in Bangladesh, the legal and regulatory framework of accounting, IFRS adoption process, benefits and challenges of adopting IFRS in Bangladesh. The issues raised in the paper are drawn mainly from prior works of literature and secondary information. IFRS adoption promises a lot of benefits like decreased cost of capital, improved financial reporting quality, increased ability to secure borders-listing, better Access to Global Capital Markets and attraction of foreign direct investment, etc. Some challenges also exist like the development of a legal and regulatory framework, low audit fees, awareness campaign and training of personnel etc. which must be overcome for successful adoption of IAS/IFRS. The paper also argues that the Financial Reporting Council (FRC), as proposed by the draft Financial Reporting Act 2013 (FRA) should not be handled by non-experts body. This paper strongly recommends that the ICAB council may be reformed consisting of Three Board - (i) Accounting Standard Board (ii) Auditing Standard Board and (iii) Financial Reports Review Board to ensure compliance of international standard and effective implementation.

Keywords: International Financial Reporting Standards, Adoption, benefits and challenges, ICAB, Bangladesh.