Ownership concentration and family dominance in the corporate sector poses major constraints to ensure corporate governance in Bangladesh, said experts at webinar.
They, however alleged that owners are now giving more concentration on profit making, not good governance in the corporate sector.
The observations were made at a virtual webinar on ‘The three lines of defence: reflections in the context of Bangladesh’ organized by the Institute of Chartered Accountants of Bangladesh (ICAB) on Tuesday.
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Mohammad Muslim Chowdhury, Comptroller and Auditor General of Bangladesh (CAG) and Former Secretary, Ministry of Finance, GoB graced the occasion as the chief guest while Sheikh Mohammad Salim Ullah, Secretary, Financial Institutions Division, Ministry of Finance, GoB and Professor Dr. Md. Hamid Ullah Bhuiyan, Chairman, Financial Reporting Council (FRC), Bangladesh joined as Special Guests.
ICAB President Mahmudul Hasan Khusru FCA delivered address of welcome and Dewan Nurul Islam FCA, past president , ICAB and Managing Director, Grant Thornton Consulting Bangladesh Ltd moderated the session as session chairman.
Dr. Javed Siddiqui, Professor of Accounting, Director of Postgraduate Taught Programmes, Alliance Manchester Business School, The University of Manchester, UK, presented the keynote paper. Masud Khan FCA, Chairman, Unilever Consumer Care Ltd was the discussant.
Mohammad Muslim Chowdhury said, ownership concentration and family dominance in the corporate sector is one of the biggest constraints to ensure corporate governance in Bangladesh. He said they are now giving more concentration on profit taking, not good governance in corporate sector.
"Corporate sector needs multipole defense to protect the public interest, he further said and adding it is unfortunate that all the allegations are dumping on the fourth line of defense-the external auditor for financial mismanagement", Chowdhury said.
He mentioned that management of the company should give emphasis on the value creation rather than the profit making, he suggested. Regulators should address all the segments of good governance in corporate sector with effective imposition of three lines of defense.
ICAB president Mahmudul Hasan Khusru FCA said, the Three Lines of Defense model is designed to give the board and senior management clarity on which line is responsible for which areas, how each of the functions and elements interrelated and which risks each function or activity should monitor.
The model provides a guidance to audit committees, he added saying that risk management of a company is very critical and complex job. He further said, if the ‘three lines’ do work properly, auditors can deploy their knowledge with professional acumen while performing auditing and there will be no gaps, overlaps or ambiguities in organizations’ risk management and control activities. Describing the three lines of defense model the paper presenter Dr. Javed Siddiqui said, this model was developed by the Federation of European Risk Management Associations (FERMA), and the European Confederation of Institutes of Internal Auditing (ECIIA) in 2008-10 and has since been adopted as a best practice framework for governance risk and compliance (GRC) and enterprise risk management.
He also said, for regulators, the Three Lines of Defense model provides a degree of consistency across the organizations they oversee regarding risk accountability and roles.
ICAB CEO Shubhashish Bose also spoke on the event.