Banking, Auditing, and Risk Management in Bangladesh
Prudential Guidelines for Banks
Prohibition on Bank Loan for Land Purchase
- The government has prohibited banks from providing loans for land purchases to prevent speculative activities.
Acceptance and Purchase of Inland Bills
- There are guidelines in place for the acceptance and purchase of inland bills to ensure that they are handled properly and within the law.
Islamic Banking Guidelines
- Banks operating under Islamic banking principles have specific guidelines to follow, including those related to interest rates and profit sharing.
Other Prudential Guidelines
- There are several other prudential guidelines in place for banks, including requirements for disclosure, asset management, and risk management.
Disclosure Requirements for Banks
Maintenance of Deferred Tax Accounts
- Banks must maintain accurate deferred tax accounts to ensure that their financial statements accurately reflect their financial position.
Purchases of Fixed Assets and Acquisition of Immovable Properties
- There are guidelines in place for the purchase of fixed assets and acquisition of immovable properties, including requirements for documentation and valuation.
Avoidance of High Expenses for Luxurious Vehicles and Decoration
- Banks must avoid high expenses related to luxurious vehicles and decoration to ensure that they are operating efficiently and effectively.
Establishment of Business Centers
- There are guidelines in place for the establishment of business centers, including requirements for location, size, and equipment.
Measures to Ensure Safety of the Vaults
- Banks must take measures to ensure the safety of their vaults, including those related to security, access control, and surveillance.
Banking Services at Customer Premises
- There are guidelines in place for banking services provided at customer premises, including requirements for documentation, risk management, and compliance.
Assessment of Risk Management
Internal Control and Compliance Risk
- Banks must assess their internal control and compliance risk to ensure that they are operating within the law and regulatory requirements.
Foreign Exchange Risk
- There are guidelines in place for managing foreign exchange risk, including those related to currency fluctuations and exchange rates.
Credit Risk
- Banks must assess their credit risk to ensure that they are lending money to customers who can repay it.
Asset Liability Management Risk
- There are guidelines in place for managing asset liability management risk, including those related to liquidity, funding, and balance sheet management.
Money Laundering Risk
- Banks must assess their money laundering risk to prevent the illegal flow of money through their institution.
ICT Security Risk
- There are guidelines in place for managing ICT security risk, including those related to cybersecurity, data protection, and access control.
Effective Audit Practices
Importance of Proper Observance of Roles and Responsibilities
- External auditors, Bank’s Board of Directors, Management, supervisors, and regulators must all work together to ensure that audits are conducted effectively and efficiently.
Examples of Overseas Audit Reports
- There are examples of overseas audit reports from UAE, Germany, and UK, highlighting compliance with local laws and regulations.
Conclusion: The Cost of Quality Auditing
- The cost of quality auditing is significant, with some countries spending up to 1% of their total assets on audit fees.
- In Bangladesh, the cost of audit fees as a percentage of net profit is around 0.5%.