FRC urges BSEC to take action against Advent Pharma, auditor Ahmed Zaker

The Financial Reporting Council has requested the Bangladesh Securities and Exchange Commission to take punitive action against Advent Pharma and chartered accountant Ahmed Zaker & Co for anomalies in appointing auditor, breaching corporate governance and ambiguity in utilisation of initial public offering proceeds.

The FRC in a letter on February 26 urged the stock market regulator to take monetary and disciplinary action against the company and auditor as per laws of the land, mentioning a number of irregularities.

Despite approving KM Hassan & Co, chartered accountant as the company’s auditor in the company’s annual general meeting for the financial year 2018-19, the company audited the financial report by another auditor named Ahmed Zaker & Co, the FRC in the letter said.

The company replied to the FRC that KM Hassan & Co failed to finish the auditing for FY19 for unavoidable reasons and resigned from the job.

The FRC said that the board of directors appointed Ahmed Zaker & Co without the recommendation of the company’s internal audit committee, which was out of board’s jurisdiction and violation of the corporate governance code of the BSEC.

It also said that the appointment of new auditor must be approved in the company’s annual general meeting as per the Company Act.

Therefore, the FRC said that the company’s explanation was unlawful and unacceptable.

The FRC suggested that the BSEC cancel appointment of auditor Ahmed Zaker & Co and re-audit the financial report of the company after appointing partners of renowned chartered accountancy firm.

The board audit committee didn’t assess the capability of auditor Ahmed Zaker & Co before appointing it as auditor of the company, breaching corporate governance code of the BSEC.

The members of audit committee of the company didn’t meet with the auditor in any discussion meeting in accordance with the CGC, which questioned the trustworthiness of the audit report.

The FRC didn’t find any explanation about the utilisation of IPO proceeds on agenda of any meeting held during 2018-19, and company’s explanation regarding the issues was not satisfactory.

There was no explanation regarding utilisation of IPO funds in the company’s financial report for 2018-19, audited by Ahmed Zaker and there was no discussion of the issue as key audit matter.

Therefore, the FRC requested the BSEC to take action against the board of the company, its audit committee, corporate governance compliance auditor and auditor Ahmed Zaker & Co.

Advent Pharmaceuticals in 2018 raised Tk 20 crore from the capital market through its IPO at an issue price of Tk 10 each share.