FRC includes more firms as public interest entities

Financial Reporting Council (FRC), an independent government regulatory body, has brought more firms under its radar.

The FRC has extended the range of firms to be treated as public interest entities in addition to what was initially defined in the Financial Reporting Act 2015, said a FRC circular last week.

The latest circular said that if a firm earns annual revenue of Tk5 crore, it will be treated as a public interest entity.

Firms having assets of Tk3 crore or more, or liabilities of Tk1 crore over the shareholders’ equity, will also be a public interest entity.

Prior to the circular, the council did not have any revenue or asset criteria while treating any firm as an interest entity.

Public interest entities are subject to a mandatory compliance with the Financial Reporting Act 2015 and later regulations by the FRC, because their reporting matters where public interest is concerned, said Mohammad Mohiuddin Ahmed, an executive director of the council.

The extended public interest definition means that more firms will have to prepare and submit their financial reports as they come under our radar, he added.

The FRC was formed under the Financial Reporting Act-2015 to regulate accounting practices under a standard umbrella.

It is empowered to set standards for accountings and audits in Bangladesh, ensure compliance and punish in cases of deviations.

The Financial Reporting Act initially included financial service providing companies like banks, non-bank financial institutions, insurers, microcredit providers, alongside state owned enterprises, and public limited companies under the radar of securities regulators.

But the act kept the path open for the FRC to determine all other organisations as public interest entities from any industry based on their revenue, asset, liability or number of staff employed.

The regulator is yet to determine the last criteria to treat a firm as public interest entities. It is also yet to be fully equipped with sufficient manpower across its different departments.