B Mirror Report: The Bangladesh Securities and Exchange Commission (BSEC) has banned three prominent audit firms from the capital market after detecting serious fraud and professional negligence in the audit of Ring Shine Textile Limited, a listed textile company.

The action follows findings of significant irregularities and lack of transparency in the company’s financial statements over four fiscal years from 2017 to 2020. The BSEC stated that although the Financial Reporting Council (FRC) had taken some earlier measures, those were insufficient to address the severity of the issue. The commission therefore exercised its authority to take stricter action to protect investors and ensure market transparency.

Sanctions Imposed

• Mahfel Huq & Co. has been banned for three years for negligence in the 2018 audit, while its partner Md. Abdus Sattar has been barred for five years.
• Ata Khan & Co. has been suspended for three years over irregularities in the 2019 audit, and its partner Makbul Ahmed has been banned for five years.
• Siraj Khan Basak & Co. has been disqualified for three years for misconduct in the 2020 audit, with partner Ramendra Nath Basak barred for five years.

Regarding the 2017 audit conducted by Ahmed & Akhter, the responsible auditor Kanchi Lal Das has passed away. However, the BSEC has asked the Institute of Chartered Accountants of Bangladesh (ICAB) and the FRC to review the firm’s current status.

Market analysts warn that misleading audit reports can undermine investor confidence and pose risks to the entire capital market. Professor Md. Al-Amin of Dhaka University’s Department of Accounting and Information Systems said that the credibility of audit reports is crucial for maintaining market stability.

Experts have also urged the FRC to take a more proactive role in strengthening oversight and ensuring accountability in financial reporting.

The BSEC reiterated its commitment to safeguarding investor interests and maintaining transparency in the capital market.