The auditor found several irregularities in the annual financial statement of Pragati Insurance Limited, which in total worth about Tk 350 crore.
Pragati Insurance auditor Huda Vasi Chowdhury & Company Chartered Accountant found the those anomalies as stated its audited report.
According to the Huda Vasi observation Pragati Insurance didn’t comply its financial disclosure ended 31 December 2019 as per the notification of Bangladesh Securities and Exchange Commission (BSEC) Ordinance 1989, Financial Reporting Act 2015.
“Pragati Insurance has shown different types of reserves without any basis in the financial statements. The company has been showing reserves of Tk 93.53 crore for a long time due to special losses. Of this, Tk 8 crore 92 lakh is also for the last financial financial year,” the observation said.
Since 2010, the company has been showing a contingency reserve of Rs 10.59 crore and has not explained its rationale to the auditor, it noted.
Although the company revalued its assets and showed a revaluated reserve of Rs 141 crore, it did not test its impairment at regular intervals as per international accounting standards.
“At the end of December 31, 2019, the company has shown a tax liability of Tk 53.78 crore accumulated over several years. But due to lack of information, the auditor could not verify the company’s tax liability,” the observation mentioned.
Moreover, the company authorities did not inform the auditor about tax assessment, disputes, lawsuits and other related issues, Hoda Vashi report said.
“Similarly, it was not possible for the auditor to verify the tax liability of Tk 6 crore 20 lakh as tax liability for the last financial year. Moreover, the company has not calculated the delayed tax as per the international accounting standards and the auditor has not been able to verify the matter of Tk 1.63 crore shown in this sector for a long time,” it said.
Apart from that the auditor could not able to verify the validity of the fixed assets of Tk 229.22 crore shown at the end of the financial year 31 December 2019 due to lack of necessary documents, it was not possible for, it said.
When asked about the irregularities in the financial report, the CEO of Pragati Insurance (CEO) Rezaul Karim told Business Mirror that these are not big irregularities.
“This is mainly due to lack of communication with the auditor. The company’s new Chief Financial Officer (CFO) took office in December last year. It was not possible for him to understand everything about the company in a short time. As a result, he could not provide sufficient information to the auditor,” Rezaul Karim said.
Meanwhile, The Financial Reporting Council (FRC) has decided to look into these irregularities in Pragati Insurance.
The FRC officials have expressed mixed reactions to the irregularities and the role of auditors in Pragati Insurance’s financial reports. Saeed Ahmed, executive director of the company, told Business Mirror that the auditor did not specify in his opinion how the company had violated the accounting standards in the financial statements, which the auditor should have done. “ However, despite the shortcomings, the auditor has to be credited for the irregularities he has found. He said the FRC would look into the company’s irregularities as well as the auditor’s responsibilities.,” Saeed Ahmed said.