The Adoption of IASIFRS-2-3

ELK ASIA PACIFIC JOURNAL OF FINANCE AND RISK MANAGEMENT
ISSN 0976-7185 (Print) ISSN 2349-2325 (Online) Volume 5 Issue 3, July (2014)
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THE ADOPTION OF IAS/IFRS IN A DEVELOPING COUNTRY – A CASE OF BANGLADESH
Maqbool Kader Quraishi Mohammed Sohel Islam

School of Business Senior Lecturer
Independent University of Bangladesh School of Business
quraishmk@iub.edu.bd Independent University of Bangladesh
maqbool.quraishi@gmail.com eehamtaj@yahoo.com
ABSTRACT

Bangladesh is a developing country with immense potential to improve its economic condition. The country
has adopted International Financial Reporting Standards (IFRS) formerly known as International
Accounting Standard (IAS) as its national accounting standards in July, 2006. IFRS is enforced by the
Securities and Exchange Commission (SEC) of Bangladesh which requires all listed operating companies to
prepare financial statements in accordance with IFRS. Literature that deals with the use of IAS/IFRS in
Bangladesh is extremely rare. Using archival data and past academic literatures, this study tries to find out
the process followed in adopting and implementing IFRS in Bangladesh and its impact.
This study found that due to immense pressure from investors (both local and foreign) and international
donor agencies like World Bank, International Monetary Fund (IMF), and others, the government of
Bangladesh has adopted IFRS. Bangladesh has adopted IFRS without any modification because of both
financial and time constraints. After adopting IFRS, the capital market of Bangladesh has been strengthened
and the Foreign Direct Investment (FDI) inflow has increased significantly.
But the local business bodies and other concern stakeholders did not like the way IAS/IFRS was adopted.
Some challenges also exist with differences in accounting needs, legal and regulatory framework, and
training of professional accountants in successful adoption of IAS/IFRS.
Key Words: International Accounting standards, International Financial Reporting Standards, Adoption,
Implementation
1. Introduction
promote world-wide acceptance on
International Accounting Standard (IFRS)
financial reporting (Edwards, 2009).
has been an issue on which various studies
Bangladesh has adopted IFRS in July
have been conducted in recent times. Due
2006. Due to increase in trade with other
to growing international business among
countries, extreme pressure from the
countries, there is strong support in favour
international donor agencies and demand
of IFRS. IFRS is a well-structured set of
from the local and foreign investors,
accounting standards which will increase
Bangladesh has decided to adopt IFRS.
transparency, understandability and
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2. Legal framework for financial

disclosure
IFRS adopted by the Institute of Chartered
In order to implement IFRS, it is very
Accountant Bangladesh (ICAB). However
important to understand the existing
there is no single set of specific generally
accounting regulations in Bangladesh.
accepted standard based on these three
Mainly the disclosure of accounting
sources. On the other hand, industries like
information is governed by a number of
bank, insurance, railways, electricity have
statutes. Three regulatory bodies provide
their own regulatory system in disclosing
the framework for the disclosure of
financial details. Nationalised Order
accounting information. The listed
(1972), Bank Companies Act (1991) and
companies are guided by the Companies
Income Tax Act (1984) also have
Act 1994, Securities and Exchange
significant influence on the financial
Commission (SEC) rule 1997 and the
reporting system of Bangladesh.
3. Companies Act 1994

accounting rules and regulations. The
Companies Act is considered as the most
latest version is the Companies Act 1994.
influential legal instrument and main
source of accounting regulation in The present Companies Act (1994) of
Bangladesh. After independence in 1971, Bangladesh is largely influenced by the
Bangladesh used to regulate the companies British Indian Companies Act 1913
by introducing the Companies Act 1913 (Aktaruddin, 2005). Prior to the
(from British rule). From then, the Companies Act 1994, Bangladesh used to
Companies Act 1913 became the principal follow the Companies Act of 1913 to
act for the listed companies. Companies regulate its listed companies. The
Act has been amended in the early 1990s, Companies Act 1913 required limited
which made major changes in the companies to present annual financial
statements which include profit and loss
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account and balance sheet. But there were needed to be disclosed separately. The
no specific format to prepare financial need for more disclosures of financial
statements. Profit and loss account was information in far more detail is underlined
prepared without detail information of under the Companies Act 1994.
income and expenditures. Balance sheet Information regarding reserves and
used to contain summary of capital, changes during the year, director's
liabilities and assets. The main remuneration, commission, tax provision
fundamental problem of Companies Act and the flow of foreign currency is needed
(1913) was that, the law does not provide to be disclosed clearly under the new
any guidelines in showing the values of the Companies Act 1994. Section 185 and
items in financial statements. The section 186 of Companies Act 1994 clearly
Companies Act 1994 made major stated the information which is
alternations in the entire financial compulsory to disclose in financial reports.
reporting standards. Under the new law Section 185 specified mandatory items to
proper valuation of items has to be shown be presented in the balance sheet and
in order to provide more transparency in income statement and section 186 stated a
financial statements. list of information which is needed to be
disclosed in the director's report. Prior to
The Companies Act 1994, which replaced
the law of Companies Act 1994, the
the Companies Act 1913, provides detailed
regulatory requirement has failed to set
requirements for preparation and
standard for corporate disclosure
publication of financial statements,
(Akhtaruddin, 2005). There was no
disclosures, and auditing. Companies Act
particular format and necessary contents
1994 clearly stated that the fixed assets
for financial reporting in the Companies
have to be shown at cost or valuation. The
Act 1913. In contrast the Companies Act
law stated that the financial statements
1994 prescribes many provisions which
prepared for the shareholders should be
are mandatory and similar to IFRSs.
prepared in accordance to true and fair
value. The provision for depreciation is
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The main problem of Companies Act is it Accepted Accounting Principle (GAAP)

lacks clarity regarding statutory regarding consolidated financial
requirements on disclosures in the statements. The Act requires a set of
financial statements of the listed financial statements for each subsidiary of
companies. On the other hand many the holding company, whereas IFRS
researchers (Mir and Rahaman, 2005) advocates for the preparation of
mentioned that the Companies Act consolidated financial statements. In order
contradicts with IFRS. For example, the to adopt International Financial Reporting
Companies Act requires capitalisation of Standards successfully it is very important
gains and losses arising from changes in for the government to eliminate all the
foreign exchange rates, which is contrary inconsistencies between IFRS and the
to IFRS. The Companies Act 1994 is also Companies Act.
inconsistent with IFRS and Generally
4. Securities and Exchange Commission

(SEC)
disclose information in compliance with
The Securities and Exchange Commission
SEC regulation. It is mandatory (as per
(SEC) of Bangladesh provides guideline
Securities and Exchange rules 1987) for
for the listed companies. Securities and
the listed companies to disclose the
Exchange Commission (SEC) regulates
following information: company history,
financial reporting disclosures as a part of
structure of the business, profile of top
listing requirements. There is two stock
employees and directors, ownership
exchanges in Bangladesh, Dhaka Stock
structure, information on capital, audited
Exchange (DSE) and Chittagong Stock
financial statements, consolidated
Exchange (CSE). Both DSE and CSE are
statements, post balance events, holdings
regulated under Securities and Exchange
in associate and subsidiary companies with
Commission Law 1987 and the Companies
relative percentage and payment of
Act 1994.The listed companies need to
dividends. In order to protect the investors’
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interest, SEC issues various rules Accounting Standard Setting-body

including accounting and auditing
The Institute of Chartered Accountant of
requirements that apply to listed
Bangladesh (ICAB) and the Institute of
companies. In October 1997, SEC
Cost and Management Accountants of
published a rule where it is clearly
Bangladesh (ICMAB) are two professional
mentioned that the listed companies
bodies which guide the accounting
require to follow accounting standards and
profession in Bangladesh. ICAB’s
standards on auditing as adopted by ICAB.
members perform financial audit whereas
The rule to follow IFRS was not
ICMAB's members do cost audit. These
mandatory until July 2006, SEC prescribed
two professional accounting bodies are
a format of audit reports specifying that
under the control of Ministry of Commerce
the auditors will verify financial statement
Bangladesh. ICAB has the sole
prepared in accordance with IFRS. If the
responsibility in developing and issuing
listed companies do not follow the rules as
accounting and financial reporting
prescribed by SEC, the commission has
standards in Bangladesh. In 1997, the
the legal right to take action. This action
Securities and Exchange Commission of
can be in the form of: suspending
Bangladesh published an ordinance where
companies or removing listing privileges,
it is made mandatory for all listed
barring the auditors who performed non-
companies to abide the accounting
complying auditing for a period of five
standards as adopted by ICAB.
years, fining the auditors and the
companies.
5. The Income Tax Act

tax administration in Bangladesh. NBR is
The Income Tax Act 1984 is another
responsible for formulation of tax-policies
important law which influences the
and tax-laws in Bangladesh. The Income
presentation and disclosure of financial
Tax Act 1984 is considered as a major
information. The National Board of
barrier for successful implementation of
Revenue (NBR) is the main authority for
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IFRS. The taxation authorities in finance leases and expensing of pre-

Bangladesh do not accept some IFRS- operation costs. So the listed companies in
compatible accounting treatments for Bangladesh need to prepare two separate
determining taxable profit, for example financial statements; one for tax reporting
prior period adjustments, recognizing purposes and another for general users.
6. IFRS Adoption
model. The British professional accounting
There are number of studies that have
bodies offer professional qualifications
examined the various aspects of IFRS
overseas. This plays a very important role
adoption and implementation in
to improve the quality of accountancy in
developing countries. These studies
developing countries (Briston, 1990).
applied qualitative analysis and used
Institute of Chartered Accountant in
structured and semi-structured interviews
England and Wales (ICAEW) is working
(example Mir and Rahaman, 2005).
closely with Institute of Chartered
Accountant Bangladesh (ICAB) to develop
IFRS is the accounting standards of UK
the skills of Bangladesh’s accountants and
and USA (Briston, 1990). According to
auditors (ICAEW, 2008). Countries which
Briston (1990) and Wallace (1990),
do not have an organised body of
countries which were part of British
accounting principles emulate the systems
Empire have professional accounting body
of other countries (Wilkinson, 1965). This
and company legislation based on British
stands true for developing countries like
model. Bangladesh was a part of British
Bangladesh which do not have any
colony for more than 200 years.
structured accounting body. Developing
Bangladesh’s Company Act as well as the
countries adopt the best practices in
accounting standards follows the British
accounting standards from countries like
framework. There are other reasons which
UK and USA.
force developing countries to follow the
accounting standards and practices of
In the recent time there has been
developed countries such as the British
significant increase in the global
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commercial activities. The participants of meet the requirements of foreign investors’

the global trade are both developed and accounting standards, Bangladesh has
developing countries. This increase in adopted IFRS (Akhtaruddin, 2005).
world trade has urged the need of uniform Moreover, the textile industry in
accounting standards. IFRS is such Bangladesh is booming. The country
accounting standards which have led to exports most of its garments product to
eliminate the global accounting differences European and US markets. So in order to
(International Accounting Standard participate in international trade it is very
Committee, 1988). Increase in important for the local businesses to
international trade and investment forces follow accounting standards same as their
the developing nations to reduce the trading counterparts (mainly European
differences in accounting reports with countries and US). It is argued by Wallace
developed countries (Chamisa, 2000). (1990) that substantial investment or
Different accounting standards create trading activity may not be the only reason
differences in financial accounting to change the accounting system of a
measurement and reporting practices country. Sweden has significant
(Evans and Taylor, 1982). Moreover, they investment in Brazil, but the financial
also create misunderstanding and reporting standard of Brazil is not as same
uncertainties to the participants of global as Sweden. So trading and investment are
economy (Evans and Taylor, 1982). not only the issues which enforce country
Unlike most of the developed and to undertake globally accepted accounting
developing countries, Bangladesh has also standards. There are other issues which
adopted IFRS in 2006 (Mir and Rahaman, force countries (particularly developing
2005). countries) to adopt IFRS. In the later part
of this chapter, those issues will be
Due to cheap labour force and
discussed.
geographical location, Bangladesh is
considered as an ideal country for As Haraou (1995) mentioned, adoption
investment in recent times. In order to and implementation process of IFRS can
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cause great deal of confusion and tension were unaware of IFRS. So this adoption of
between the principal setting body and IFRS created a lot of confusion and many
other interested groups. Since the adoption critics believe that without the
of IFRS in Bangladesh, the conflict raised participation of all users of accounting
between ICAB and other concerned groups standards it is not possible to implement
(Mir and Rahaman, 2005). ICMAB and IFRS in a smooth way. Despite the
the business society of Bangladesh did not changes in accounting standards in
accept the way IFRS was adopted. The Bangladesh, still many areas of business
main users of accounting standards found continue to follow the traditional
the process of adopting IFRS as accounting procedure rather than following
undemocratic (Mir and Rahaman, 2005). the new standards (Financial Express, 2nd
Even many users of accounting standards November 2007).
7. Education and training of professional

accountants
accounting profession. World Bank
Accounting standards can be transferred to
provided both financial and technical
developing countries through ‘transfer
support to ICAB for the adoption of IFRS
agents’ (Lowe, 1967). These transfer
(Mir and Rahaman, 2005). As cited from
agents are accounting professors,
Wallace (1990), Enthoven (1981) opined
accounting firms and the national
that foreign assistance is needed for the
accounting bodies who can train the
developing countries to upgrade the
accountants and graduates to spread the
accounting education. It is of paramount
standards. So education and training is
importance to train the accountants with
particularly very important to spread the
new standards or else the adoption of new
accounting standards. Lowe (1967)
standards will create confusion among the
mentioned that spreading of accounting
accounting professionals.
education helps to train the manpower and
provides necessary advice needed to Institute of Chartered Accountant in
maintain the strength and status of England and Wales (ICAEW) is also
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working with Institute of Chartered number of professional accountants both in

Accountant Bangladesh (ICAB) by public and private sector is inadequate to
providing technical assistance to develop provide qualified accountants for the large-
the accounting standards of Bangladesh scale production units in Bangladesh
(ICAEW, 2008). According to Parry and (Parry and Groves, 1990). This shortage of
Groves (1990), technical assistance works the number of accountants exists mostly in
to design and/or implement new all developing countries. So the
accounting standards and train accountants government and other donor agencies
to cope with accounting standards. A lot of particularly need to depend on the
attention has been given to raise the professional accounting bodies as the
accounting standards of developing source of accountants. Due to this shortage
countries, but the problem in developing of professional accountants it is seen that
countries like Bangladesh is the shortage the government and the donor agencies
of trained accountants. If there are not help the professional bodies both
adequate trained accountant then the financially and technically to raise the
measures of raising accounting standards accounting standards as well to increase
may not bring any benefit. It is the the number of accountants.
accountant who needs to carry out the
The questions may arise do more
accounting standards, so before
accountants leads to better standards of
implementing any standards the concerned
accounting. Parry and Grove (1990) have
authorities need to give more attention to
performed an empirical study based on
increase the number of trained
Bangladesh’s context to know whether
accountants.
more professional accountants actually
According to ICAB (2012), the number of help to raise the accounting standards or
qualified accountants in Bangladesh is not. In the study Parry and Grove (1990)
around 1250. This figure is not sufficient have not found any evidence of
enough to handle the country’s rising accountants improving the quality of
business and financial development. The accounting. For example, professional
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accounting body in Tanzania questioned as compared to local companies. This

on the efficiency of its own qualified discourages accountants to move in the
accountants. The body raised the issue that local companies.
the professional accountants are not
When a country adopts IFRS, it is very
capable to handle major accounting issues
necessary to teach the new rules to
in state owned enterprises in Tanzania.
university students (Pekmez and McGee,
Similar condition exists in other
2004). In Bangladesh, existing curriculum
developing countries including
does not adequately prepare students for
Bangladesh. Training inadequacies are
the world of new accounting standards. It
considered as one of the main factors for
is very important for the universities to
which accountants cannot improve
train the professors so that the professors
accounting standards. As Parry and Grove
can share the knowledge of new
(1990) mentioned, trainee accountants in
accounting standards with the university
Bangladesh get less exposure to
students. But such step has not been taken
accounting system which can be copied in
in Bangladesh.
other organisations. The entrepreneurs or
corporate house of Bangladesh do not use
ICAB requested many local and
proper accounting standards to give
multinational organisations to provide
opportunity to the trainee accountants to
assistance to improve the quality and
adopt standardised accounting system.
quantity of training of students (ICAB,
There are number of multinational
2010). ICAB is also working with ICAEW
organisations which are practicing
to improve the accounting standard and to
standardised accounting system but the
improve the quality of professional
problem is the accountants who are
accountants. But many critics for example
working in those multinational
Mir and Rahaman (2005) argue that the
organisations are reluctant to move to local
steps taken by ICAB are not enough to
companies (Parry and Grove, 1990). In
improve the quality of accountants in
Bangladesh, the multinational
Bangladesh. From this we can infer that
organisations pay very high remuneration
adopting IFRS will not help Bangladesh to
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standardise its accounting system if the of professional accountants.

country do not focus to develop the skills
8. Accounting Standards and their

relation to economic development
strong capital market helps in the
Over the years, the view has been
development of savings which effect
expressed that accounting system has an
economic growth through investment. The
important role to play with the
capital market transfers the accumulated
development process of an economy
savings to the most efficient investment
(Chaderton and Taylor, 1993). Little
opportunity (Belkaoui, 1994). This
attention has been given by the researchers
function of the capital market stimulates
on the linkage between accounting system
economic growth. Lee (1987) also
and economic development (Wallace,
mentioned that, well developed accounting
1990; Chaderton and Taylor, 1993).
infrastructure ensures well-organised
Development of accounting standards
capital market and leads to economic
contribute to economic development
development. This is because standardised
whereas lack of accounting standards work
and globally accepted accounting system is
as a barrier to economic progress of
a good indicator of macro-economic
developing countries (Chaderton and
variables and makes the economic decision
Taylor, 1993). Belkaoui (1994) mentioned
making process easy. An effective
about the need of accounting standards for
accounting system helps a country to
the development process of an economy.
compare its economic variables with other
The researcher opined that the accounting
country. Moreover standardise accounting
information system of a country influences
system attracts more multinational
the economic growth. Accounting
companies to invest in a country. Seiler
information disclosure minimises the
(1966) stated that, strength of a country’s
capital market uncertainty and encourages
accounting system determines the rate at
investors to buy and sell more securities in
which development will progress. As cited
the capital market (Belkaoui, 1994). A
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from Chaderton and Taylor (1993), claimed that the study was based on faster
Enthoven (1977) mentioned standard growing countries of Africa which cannot
accounting practice have dual role to play provide enough evidence whether IFRS
in economic development of a country. adoption really leads to economic growth.
IFRS is a world-wide accepted accounting Instead Samuels (1993) mentioned only
standard which can create an environment faster growing countries that are wealthier
of confidence and will attract more can afford to undertake IFRS. Adoption of
investment particularly in developing IFRS should be based on realities. IFRS
countries like Bangladesh. Belkaoui will not bring any benefit to the
(1998) mentioned that, economic growth developing countries like Bangladesh
rate and the development of a country’s without considering the local economic
economy are closely tied to the adequacy condition. This is supported by Chaderton
of accounting system and the accounting and Taylor (1993), they mentioned that
development process of that country. Due accounting system should not be adopted
to inadequate accounting standards, the by the decision makers without a clear
financial reports of developing countries understanding of the development role of
do not reflect the commercial results accounting on the linkages which may
(Samuels, 1990). exist between the accounting system and
the generation of economic growth. Jaruga
Larson (1993) claimed that, developing
(1993) advocated for the adoption IFRS
countries which have adopted and
but also mention that the process of
modified IFRS achieved higher economic
remodelling accountancy standards have to
growth. Developing countries which have
be gradual and the accounting standards
followed IFRS and modified IFRS
should be based on a nation’s economic
according to local environment factors
realities. The adoption process of adopting
achieved high economic growth rate
international accounting standards has
compare to countries which do not adopt
raised a lot question. The critics argue that
IFRS (Larson, 1993). But the study was
Bangladesh has adopted the global
heavily criticised by Samuels (1990), who
accounting standards with any
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modification and the new standards do not and commercial activities.

match the reality of country’s economic
9. Pros and Cons of adopting IFRS in

developing countries
differences in accounting standards it is
IFRS advocates for international
difficult to raise capital internationally.
accounting harmonisation. Many studies
These incompatible accounting standards
supported that international accounting
force corporations to prepare multiple sets
harmonisation would help to promote
of financial statements due to the
economic growth (Chamisa, 2000; Taylor
requirements of various stock exchanges
et al., 1986). Many accounting difficulties
(Larson 1993). Introduction of IFRS
arise while conducting international trade.
would rescue corporations from preparing
The problems include difficulties in
multiple sets of financial statements and
understanding financial statements and
enhance global capital markets. For
consolidation perplexity which arises due
example, London stock exchange (the
to different accounting, auditing and tax
international capital market with the
system (Larson, 1993). Hence it is
largest number of foreign listings) requires
impossible for the creditors, investors and
foreign listed firms to comply with IFRS.
other stakeholders in international trade to
perform business without uniform Chamisa (2000) argued that, developing
accounting standards. It is believed that, countries adopt IFRS not to attain IFRS as
adoption of IFRS will help to mitigate the national standards, but to meet the need for
problem of differences in financial appropriate accounting and reporting
reporting and will create better standards. International accounting
environment for international trade. harmonisation may not be the main
objective for developing countries.
International accounting harmonisation
Because most developing countries’
will have a beneficial effect on the global
international trade is very insignificant
capital market (Collins, 1989). Due to
compare to developed nations. The
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international accounting harmonisation is community. Time-constraint is another

crucial to developing countries due to its issue which forces the developing
heavy dependency on the inflows of countries for wholesale adoption of IFRS.
foreign capital to finance economic and For example, one of the reasons
industrial developments (Chamisa, 2000). Bangladesh fully imitated IFRS is due to
IFRS plays a key role for developing the time limitation imposed by World
countries to obtain fund from international Bank, International Monetary Fund (IMF)
institutions like World Bank and IMF. and other donor agencies.
Adoption of IFRS also attracts
Many researchers have opposed the
multinational companies to invest in
wholesale adoption of IFRS. Briston
developing countries. In order to obtain
(1978) mentioned that developing
inflow of foreign capital, developing
countries should create their own
countries tend to harmonise its accounting
accounting system rather adopting the UK
standards with international standards by
and the USA standards. Perrera (1989)
adopting IFRS.
stated that, accounting system based on
As cited from Larson (1993, pp. 30-31), developed country’s standard is not
Belkaoui (1988) mentioned that wholesale relevant and useful for the developing
adoption of IFRS will help the developing countries. For example, the major problem
country in several ways. The benefits of of wholesale adoption of IFRS is the lack
wholesale adoption IFRS as mentioned by of accounting standards for major sectors
Belkaoui (1988) are: a) reduce the set-up of Bangladesh’s economy. Bangladesh’s
and production cost of accounting economy is highly dependent on
standards, b) facilitate accounting agriculture products, like jute, tea and in
profession to follow well-established recent times the country has seen
professional standards of behaviour and development in its textile industry. But
conduct and c) legitimize the country’s there are no IFRSs in these sectors. IFRSs
accounting standard-setting body as a full- are based on the economy of developed
fledged member of the international nations so there is huge doubt whether the
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wholesale adoption of IFRS will really be useful for Bangladesh or not.
10. Influence of the World Bank and

IMF in adopting IFRS
nations which are heavily dependent on
Developing countries like Bangladesh are
foreign aid. Unlike other developing
forced to adopt IFRS due to extreme
countries, Bangladesh tends to follow
pressure from international donor agencies
policies as prescribe by World Bank and
like World Bank and IMF. Points and
IMF. Bangladesh’s accounting standards
Cunningham (1998) stated that foreign
need to be in compliance with IFRS in
donor agencies are continuously trying to
order to get loan or financial assistance
impose IFRS in developing countries
from World Bank, IMF and other donor
instead of assisting on real accounting
agencies. Points and Cunningham (1998)
reforms in these countries. Wallace and
heavily criticised the role of western world
Briston (1993, pp. 216-217) observe that,
and donor agencies for forcing developing
the biggest problem developing countries
nations to adopt IFRS. Wallace and
have is that of too many foreign ‘experts’
Briston (1993) stated that the accounting
marketing half-baked solutions to
and the accountability problems of each
problems that neither they nor the recipient
developing country is different and the
nations understand. The foreign donor
donor agencies should work with the
organisations advocates on adoption of
developing countries to improve the
IFRS by saying that implementation of
national accounting standards rather than
IFRS would ensure accountability and
enforcing to adopt IFRS.
transparency in financial reporting of
developing countries like Bangladesh.
Bangladesh is among those developing
11. Conclusion
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depending on the accounting standards of

Prior research related to the adoption and
Anglo-Saxon countries.
implementation of IFRS has been
reviewed in this study. The review The review of literature suggests that
suggests that IFRS adoption and developing countries tend to adopt IFRS
implementation has both positive and without any modifications. In practice,
negative sides. Many researchers (for unlike most developing countries
example Larson, 1993 and Taylor et al., Bangladesh has adopted IFRS without any
1986) found that implementation of IFRS modifications. There is shortage in the
has positive impacts on developing existing literature of studies on IFRS
countries economic growth. IFRS is adoption and impact of IFRS on
considered as the accounting standards of Bangladesh economy and accountancy
Anglo-Saxon countries and developed practice, so there is need for more research
nations. Some researchers (Hove 1990, on this area.
Points and Cunningham, 1998) opined
that, developing countries should develop
their own accounting standards rather than
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The Adoption of IASIFRS-2-3

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ELK ASIA PACIFIC JOURNAL OF FINANCE AND RISK MANAGEMENT

THE ADOPTION OF IAS/IFRS IN A DEVELOPING COUNTRY – A CASE OF BANGLADESH

Maqbool Kader Quraishi Mohammed Sohel Islam

2. Legal framework for financial

3. Companies Act 1994

The main problem of Companies Act is it Accepted Accounting Principle (GAAP)

4. Securities and Exchange Commission

interest, SEC issues various rules Accounting Standard Setting-body

5. The Income Tax Act

IFRS. The taxation authorities in finance leases and expensing of pre-

commercial activities. The participants of meet the requirements of foreign investors’

7. Education and training of professional

working with Institute of Chartered number of professional accountants both in

accounting body in Tanzania questioned as compared to local companies. This

standardise its accounting system if the of professional accountants.

8. Accounting Standards and their

modification and the new standards do not and commercial activities.

9. Pros and Cons of adopting IFRS in

international accounting harmonisation is community. Time-constraint is another

wholesale adoption of IFRS will really be useful for Bangladesh or not.

10. Influence of the World Bank and

depending on the accounting standards of

[6] Edwards, J. R. (2009) Financial [11] Larson, R., E. 1993 International

[16] Pekmez , S. and McGee, R., W. 2004. A Application of International Accounting

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