The National Board of Revenue is set to accept only Document Verification System-authenticated financial report in an effort to ensure its genuineness.
The DVS, prepared by the Institute of Chartered Accountants of Bangladesh (ICAB), will help check fake and duplicate audits report of the companies.
In a virtual member conference on Thursday, Shabbir Ahmed, director of CIC and NBR taskforce head in this matter, said the Deputy Commissioner of taxes has to accept verified financial reports as per the legal provision incorporated in 2018.
There are no legal complexities to make DVS-verified audited reports mandatory, he said.
NBR member (tax policy) Md Alamgir Hossain said no legal changes will be required to make it mandatory rather than the issuance of an administrative order.
"We want to ensure the compliance. DVS might be one of the instruments to verify accounts," he said.
The ICAB organised the programme on Document Verification System and Authenticity of Audited Financial Statements.
Speaking at the conference, NBR chairman Abu Hena Md Rahmantul Muneem said the DVS will help bring financial discipline.
"Due to the absence of automation, there is a lack of transparency in the country's financial sector, which ultimately encourages corruption," he said.
DVS is an application under which a document verification code (DVC) will be automatically generated by the system after the submission of some specific information by the auditor. It can be viewed by the government agencies, different stakeholders and regulators like Bangladesh Bank, Financial Reporting Council or FRC, Bangladesh Securities and Exchange Commission or BSEC, Insurance Development and Regulatory Authority or IDRA, etc. covered under MoU or any framework with the Institute.
ICAB president Muhammad Farooq said all the companies registered with Register of Joint Stock and Companies or RJSC must be audited by CA firms.
"We have found that there is a big mismatch between the data of the ICAB as well as NBR and the RJSC in relation to the number of companies audited by practicing members, the number of annual returns submitted with RJSC and the number of corporate TIN holders", he said.
This mismatch pointed fingers to the evidence of fraud audited financial statements and evasion of tax escaping themselves from the tax net, he added.
"Auditor has to maintain confidentiality of the information of the clients. The auditor can share non-compliance issues with the respective regulator if the management fails to resolve," he informed.
Disclosing clients' data in the DVS may create legal challenges, he added.
The NBR may include this provision through issuing an SRO and later it should be included in the income tax law, he suggested.
ICAB vice president Muhammed Forkan Uddin presented` a keynote paper in the conference and explained the importance of DVS to curb such malpractice.
He said DVS will protect multiple audited financial statements of a particular company and tampering with audited financial statements. He also explained some technical parts of the system.
Md. Humayun Kabir, member council and chairman of the Taxation and Corporate Laws Committee, ICAB presided over the conference.