NOCLAR will protect public interest from potential illegal acts

Responding to Non-compliance with Laws and Regulations (NOCLAR) is an international ethics standard for auditors and other professional accountants. It sets out a first-of-its-kind framework to guide professional accountants in what actions to take in the public interest when they become aware of a potentially illegal act, known as non-compliance with laws and regulations, or NOCLAR committed by organizations.

Speakers forwarded these views at a webinar on ‘Responding to Non-Compliance with Laws and regulations: Bangladesh Perspective’ organized by the Institute of Chartered Accountants of Bangladesh (ICAB) on 18 May 2022.

Tapan Kanti Ghosh, Senior Secretary, Ministry of Commerce, GoB joined the program as the Chief guest while Barrister Nihad Kabir, Chairperson of Trustee Board, Business Initiative Leading Development (BUILD); and  Sabbir Ahmed FCA, Chairman of Committee on Ethics and Independence of South Asian Federation of Accountants (SAFA) & Member Council of ICAB  joined as panel speakers. ICAB President Address of welcome while A F Nesaruddin FCA, Past President of ICAB and Partner, Hoda Vasi Chowdhury & Co., Chartered Accountants moderated the session as Session Chairman. Sk. Ashik Iqbal ACA, CPA (USA), Partner, Nurul Faruk Hasan & Co. Chartered Accountants presented the keynote paper.

Tapan Kanti Ghosh, Senior Secretary, Ministry of Commerce, GoB said, the international financial system, business, trade and commerce are taking new shapes with the advent of ICT and its application in business has accompanied some new opportunities along with a few challenges.

In the open market economy, many factors are involved in the business process, and in the loopholes, many corporate and financial scandals and misbehaviours occurred around the world, those have been met by a variety of responses like the use of ICT, reformation of policies and regulations, Mr Tapan said adding, such occurrences have left a lingering feeling of doubt and mistrust of the way markets to work and of the way professionals who support markets, in the private and public sectors.

ICAB President Md. Shahadat Hossain FCA said NOCLAR is action compliance with the violation of a law or regulation that has a direct impact on financial statements. In 2017 Professional Accountants’ Response to Non-Compliance with Laws and Regulations (NOCLAR) has been established by the International Ethics Standards Board for Accountants (IESBA to take actions to protect the public interest, he added.

He said NOCLAR guides auditors and other professional accountants in what actions to take in the public interest when they found non-compliance with laws and regulations, or NOCLAR, committed by a client or employer.

“It has been established to address the breaches of laws and regulations that deal with matters such as fraud, corruption and bribery, money laundering, tax payments, financial products and services, environmental protection, public health, safety, etc”, said the ICAB President.

He said professional Chartered Accountants should make such disclosure under the NOCLAR provisions for the public interest or from a legal or regulatory obligation. When responding to non-compliance or suspected non-compliance with laws and regulations, an auditor should firstly raise the matter with the management and advise them to rectify, remediate or mitigate the consequences, stop the non-compliance, or report it to an appropriate authority, he added.

“If the auditor considers that management has not taken appropriate action, the auditor should determine if further action is needed or not.  In this event, the auditor shall act in good faith and exercise caution when making such statements and assertions, he urged.

He further said the auditors must act to convince the management for establishing the whistle-blowing mechanism in the internal system of the organisation with a view to creating a compliance culture with existing standards, rules and regulations.

There are greater expectations on the management to take action in response to non-compliance in business, because of their role and influence within the organization, he said.

We all must have to understand that Non-compliance may result in fines, litigation, or other consequences for the employing organisation that may have a material effect on its financial statement and may also affect negatively investors, creditors, employees or the general public, he further said.