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Accounting Practices in Bangladesh: A Study On Kazi Farms
Accounting Practices in Bangladesh: A Study On Kazi Farms
Introduction
From very ancient period people living their life by doing various professions. Among those
some are eternal and some are prestigious. The Accountancy profession is now accepted as one
of the most prestigious profession. After industrialization it was accepted as a profession in
worldwide. There are a number of different national and international institutes of accountants
to control and develop the profession. At present world the accountancy profession indicates
two types of certified accountants- one is “Chartered Accountants” and another one is “Cost &
Management Accountants”. In Bangladesh there are two different institutes for the
accountants- “The Institute of Chartered Accountants of Bangladesh” (ICAB) and “The Institute
of Cost & Management Accountants of Bangladesh” (ICMAB). It is been compulsory to audit the
accounts for different codified companies in Bangladesh and only the Chartered Accountants
can perform this task. In the “Section 220 of Companies Act 1994”, it is been compulsory to
audit the manufacturing costs for a number of specific organizations and the accountants
passed from the ICMAB can perform this task.
1.3 Methodology:
a. Kind of Research: This study is a depiction kind of research in nature and it controlled by
gathering both essential and optional information. It has endeavored to utilize both essential
and optional wellsprings of collecting data and some are to make the report satisfactory with as
deliberation as could be allowed.
b. Type of data collection: Keeping in mind the end goal to achieve the goal of the study, all
vital data are set up by gathering both essential and optional sources of information.
I. Essential Data:
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The essential sources are as per the following face to face discussion with my advisor.
II. Optional Data:
The secondary sources of data and information are:
- Website of Kazi Farms Group (www.kazifarms.com)
- Review Report of Kazi Farms Group
- Publication.
1.4 Limitation of the study:
There are a few limitations that I face while this study as take after:
The association keeps up some classification while giving data with respect to their
specialization. Uniquely, KFG, never reveal their costing and buy related data. Thus, this study
does not shoulder any substance identified with cost bookkeeping. In addition, I had no chance
to visit their partners and sister concerns bunch amid the venture thus I can't collect any data
that how they keep up their bookkeeping framework, control and synchronize with the head
office. To beat this circumstance, I needed to make some supposition that may cause couple of
mistakes in this study. Despite all these constraints, I have endeavored to put my best exertion
beyond what many would consider possible.
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g. Implementation of Management Accounts- Sometimes professional accountants are
appointed to help the management. Here they prepare financial plans and budgets,
financial report and manufacturing expenses report, compare and analyze the actual
results with standards.
c. Types of Members:
There are two types of member of the association- “Associate” and “Fellow”. A member
is called an associate if he is listed in the register of the association and can use
“A.C.M.A” after his name. And if a member engaged as an associate for 5 years, then he
can be listed as a fellow member after applying and made payment of the fee and
should be approved by the council [Section 6(4)]. After that he can use “F.C.M.A” with
his name. People who were the fellow member of an abolished institute before
declaration of the ordinance can use F.C.M.A after their name until they are registered.
d. Management:
There will have a council to manage and accomplish the activities of the institute
[Section 9(9)]. Council will be formed with the combination of following persons-
1. Members of the institute will elect 12 persons from the fellow members.
2. 4 persons will be selected by the government [Section 9(2)]. Here nobody from the
institute will be nominated as a member of the council.
3. Members of the council will select chairman, two vice-chairman, secretary and
treasurer.
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e. Functions of Council: The functions are as follows-
1. The Council can apply necessary power to achieve the objectives of the ordinance
and to accomplish the functions.
2. Organize the examination for those who are seeking membership of the institute.
3. Student registration and organize training.
4. Set up standards for achievement of membership.
5. Acceptance of foreign competence and training to provide membership.
6. Provide or cancel certificates for training.
7. Keep records of registered members and publish the list of the members and
practitioners.
8. Set up and receive fees from examinee, students and members.
9. Retract names from register and re-register the names.
10. Maintain honour and dignity of professional competence of the members of the
institute.
11. Conduct research work on cost and management accounting by providing financial
support or any other way to the members of council.
12. Provides professional service in case of cost and management accounting.
13. Manage the library and publish books and journals on cost and management
accounting.
14. Apply rules and regulations upon members, officers and employees of the institute.
Council will set up the following standing committees to successfully accomplish the
functions-
- Executive committee
- Education committee
- Examination committee
- Research & Development committee
- System development committee
Cost and Management accountants’ regulation was prepared in accordance with the
order in 1980. The rules and regulations to operate the institute and code of conducts
for members are included in the order.
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c. Uses of accounting policy and standard- Accounts of a firm don’t get completeness
without having accounting policy and standards. But sole proprietorship and
partnership firm don’t follow the standards and policies for which it is not accepted
by others but accepted by the owners.
d. Audit- Audit of account animates an organization. There have possibilities of
mistakes and frauds in the account if auditing is not done. Audit of account for sole
proprietorship and partnership firm depends on the willingness of the owners, and
here it is not compulsory to audit the account.
B. Accounting system of companies-
a. Unlimited Liabilities Companies- Here liabilities of shareholders are unlimited. The
employees of unlimited liabilities companies are personally liable for their activities.
b. Limited Liabilities Companies- Here liabilities of shareholders are limited and they
bear liabilities of a certain amount. Public limited company is known as registered
company because it has to register in the stock exchange. And shares of Private
limited company are not under the control of share market.
The book-keeping system of companies is described below-
i. Legal obligations: According to the “Section 2 (1) (d) of Company Act, 1994”-
Company means any company established and registered or any company
existed with following this Act. These companies record the account by
following double entry system. So there have chance to audit the account
and it can be accepted to all parties of business.
ii. Double entry system of book-keeping: In this system all financial transactions
are recorded into two side- debit and credit side of the account. As following
the rules of double entry system, accounting is done into different steps such
as- Journal, Ledger, and Trial Balance and then the final step is preparing the
financial statement by making necessary adjustments with the trial balance.
iii. To follow accounting policy and standard: Any account can’t be completed if
it not follows accounting policy and standards. In case of Companies, policy
and standard is judged accurately, because all parties of business are
deliberated here.
iv. Audit: Audit of account is compulsory for Public limited company as it brings
accuracy into the accounting system of a company.
v. Cost Accounting: Manufacturing companies prepares their account by
following the cost accounting system.
C. State and Statutory accounting system-
This type of company is established in accordance with the special order of the President
or National Council of Law and Justice.
i. Use of accounting policy and standard- These organizations keep records of
account and prepare financial statements by following double-entry book-
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keeping system. In double-entry system, accounting policy and standard is
maintained.
ii. Audit- Audit is compulsory for these organizations, because if there have no
rule of audit than the possibility of mistakes and fraud is exists.
To develop the accounting system of Bangladesh, every organization should follow the
double-entry system and also should follow the International Accounting Standards
issued by FASB.
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accurately. As a result, number of problems faced while preparing financial
statements.
2. Complexity in inter firm comparison- Registered firms follows different
accounting policy to prepare financial statement for which there have complexity
in inter firm comparison.
3. Weakness of legal base- Nationalized industries is controlled under “Bangladesh
Industrial Acts, 1972”. In this Act, there have rules for preparing account but have
no any rules for preparing financial statement. As a result, financial statement is
failed to fulfill the need of users.
4. Qualitative value of accounting data- many organizations didn’t follow the
international standards while recording accounting information. For this reason,
user of accounting data faces many problems.
5. Weak accounting system- There has lack of experienced employees in the
accounts section of many registered firms for which accounting system cannot be
maintained properly. So it is necessary to appoint available experienced people
for performing accounting activities.
6. Lack of comparative information- According to the “Section 185 of Companies
Act, 1994”, it is compulsory to show the accounting information of previous year
while presenting data of current year.
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Thus, Kazi Farms has played a key role in bringing about called “poultry revolution” of
Bangladesh. This has increased the availability of protein in the country, and has created
unprecedented income generation opportunities for rural households all over the country.
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For instance, If Kazi Farms Group signs an agreement to develop a firm’s product 7,
00,000 taka. In the January, Kazi farms Group starts development, caused cost of 5,
00,000 taka using a credit card and by the finish of January conveys a total farms
products to the purchaser. In February, Kazi farms gather 7, 00,000 taka from the client.
In March Kazi farms Groups pays the 5, 00,000 taka due to the loan bosses. The net
Income from every month under cash basis accounting and accrual basis accounting are
as per the following.
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Tables: income statement of cash basis
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3. Only the money collected that are gathered from deals and other income exercises
are appeared as income in real cash basis reports. On accrual basis reports, income
incorporates both gathered and uncollected sums.
4. Only the money paid to sellers and others are appeared as cash basis reports, though
on accrual basis reports, costs incorporate both paid and unpaid sums. The
accompanying are cases that utilization an accrual basis framework
5. Revenue is perceived before money is received and is portrayed as collected income.
It is sorted as a present resource. The most widely recognized illustration is accounts
receivables that outcome from deals to clients
6. Cash is received before the income is earned and is depicted as conceded income. It
is ordered as a present obligation. For instance, a client may pay you a store for a
benefit. In any case, you don't perceive the income until the point that you have
played out the administration. Another case may be prepaid rental wage. An
inhabitant may pay you on a quarterly basis for lease; however you just perceive
every month's lease as it happens.
7. Expense is perceived before cash is paid and is depicted as accrual cost. The most
Regular case is accounts payables that outcome from buys from sellers. Another Case
is paying enthusiasm on a bank advance on a quarterly basis yet recording the
accrual. Enthusiasm on a month to month premise.
8. Cash is paid before the cost is brought about and is described as a conceded or
prepaid cost. It is sorted as a present resource. For instance, you may pay your
accident coverage each six months, yet you just remember one month of cost at any
given moment.
9. It is disturbing time to change accounting framework from cash basis to accrual
basis. Just experienced also, account foundation individual can successfully actualize
this new immaculate approach, as indicated by GAAP. Another adaptable method to
build up this laborer through preparing and workshop, subsequently, they could be
adequately actualize and construct an incredible breakthrough.
C. Bank Reconciliation
Bank compromise articulation is a report which looks at the bank adjust according to
organization's accounting records with the adjusted expressed in the bank statement. It
is run of the mill for an organization's bank alter as indicated by accounting records to
fluctuate from the balanced by bank statements in view of timing contrasts. Certain
trades are recorded by the components that are invigorated in the bank's systems after a
particular time slack. Besides, a couple of trades are spoken to in the bank's monetary
structure before the organization wires them into its own specific accounting system.
Such arranging contrasts appear as obliging things in the Bank Reconciliation Statement.
The inspiration driving setting up a Bank Reconciliation Statement is to perceive any
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inconsistencies between the accounting records of the substance and the bank other
than those in view of run of typical arranging contrasts. Such differences may exist in
view of a botch as for the organization or the bank. While talked about concerning the
bank compromise I discovered it is one of the enormous issues in Kazi farms gatherings.
In the meantime, 30% react concurred with me, in this manner; I keep it as a third
significant inconvenience in my report.
4 Recommendations
Kazi Farms Group has an extremely attractive number of exchanges. To stay with the
clearer and more let it to grow up, it should put to a great degree great thought to its
accounting framework. In request to track all the exchange and make them instructive
organization should start computerized program. Besides, it must change its exchange
recording framework from cash basis to accrual basis with the goal that the month to
month report won't demonstrate negative adjust and the other way around. To be a
perfect organization, kazi farms group ought to beat their major issues then well ordered
it could challenge any genie problem in the up and coming days. It is worth to say that,
previously execute an appropriate accounting framework, KFG need to prepared and
additionally procure new worker who have encountered a fitting accounting framework.
What's more, on the off chance that they execute computerized programming, it would
be more as productive as costly and preparing on programming to the current and
additionally new worker is again expensive.
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5 Conclusions
Kazi farms groups are a notable name in Bangladesh for it managing their customers. As
indicated by their administrative, advertising and financial arranging Kazi farms can
proceed flawlessly. Moreover, The Accounts department took the test and demonstrated
their quality of mind by the timely distribution of yearly Annual Financial Reports. Every
last division in the division should be supplemented. In this report, I have endeavored
my level best to see organization accounting systems and dealings used by KFG. What
and how KFG use accounting information for judgment and outer monetary announcing
close by portraying the systems and systems of accounting information. In this report, I
include our acquired nature from accounting course and endeavor to fit in with the
methodologies strategy and systems took after by the organization.
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