Audit report verification with ICAB system made mandatory

NBR asks field offices to use DVS to check fake report submission

Staff Correspondent | Published: 22:52, Dec 01,2020

 
 

A file photo shows the National Board of Revenue headquarters in the capital. The National Board of Revenue on Tuesday made it mandatory to verify companies’ audit reports with newly introduced document verification system of the Institute of Chartered Accountants of Bangladesh to prevent the submission of fake audit reports and ensure proper revenue generation from the corporate sector.— New Age photo

The National Board of Revenue on Tuesday made it mandatory to verify companies’ audit reports with newly introduced document verification system of the Institute of Chartered Accountants of Bangladesh to prevent the submission of fake audit reports and ensure proper revenue generation from the corporate sector.

The revenue board on the day asked its field-level income tax officials to reject audit reports of corporate taxpayers if the reports are not authorised by the DVS of the ICAB.

The tax officials were also asked to take punitive measures against offenders as per article 35 of the Income Tax Ordinance-1984.

The NBR and the ICAB on November 12 jointly launched the system, developed by the ICAB, to verity the authenticity of financial reports amid a surge in the submission of fake audit reports by corporate entities with their income tax returns.

The NBR signed a memorandum of understanding with the ICAB on the use of the system.

The DVS system will generate a document verification code (DVC) for each audit report audited by an ICAB member and the code will be provided with the audited reports.

Income tax officials will consider an audit report fake if the report does not contain any such code.

In an instruction signed by NBR second secretary (income tax policy) Md Mohidul Islam Chowdhury and issued on November 26, the NBR said that a deputy commissioner of taxes (DCT) would check the authenticity of the DVC provided with the audit reports by visiting the online DVS of the ICAB.

A tax official will not accept the reports if the reports are found fake or not signed by a chartered accountant and not have the signature of required number of directors of the company, according to the instruction.

The official then will assess income and tax liability of the company as he or she thinks fit, it said.

The official will include in the tax assessment order a number of information, including name of chartered accountant, date of auditing, DVC and the name of directors signed in the audit report.

The verification process will not be applicable to audit reports signed before December 1, it added.

The launching of the system and instructions came following the detection of a huge number of forged audit reports filed by corporate taxpayers.

According to the NBR and the ICAB, more than half of the companies filed fake audit reports with their income tax returns.

Members of the ICAB signed some 17,000 audit reports in the fiscal year 2019-20 though the number of tax returns was more than 35,000 in the year.

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