Introduction

We have completed our term paper on audit reports of banking industry. We have chosen five leading banks in Bangladesh; those are Mercantile Bank Limited, One Bank Limited, BRAC Bank Limited, The City Bank Limited, and Standard Bank Limited. As students of the business studies, we have tried to present here the Auditors Report on financial statements according to ISA 700 and the Basic elements of the Auditors Report. By going through this report, anyone can easily understand how auditors make and represent audit report, the procedure and style of audit reporting, the reporting mechanism of banking industry.

Objective of the study To learn about Auditors Report on financial statements according to ISA 700. To know about the Basic elements of the Auditors Report To know how auditors make and represent audit report. To know about the procedure and style of audit reporting. To learn about the reporting mechanism of banking industry.

Methodology We use secondary data source to collect information through annual report, Internet, and library. We do not have any opportunity to use primary data source. For the same reason, we are unable to do sampling or any kind of survey. Limitation Due to the shortage of time, we are not able to cover all possible areas regarding audit conclusion and reporting.

Organization Overview

Mercantile Bank Limited emerged as a new commercial bank to provide efficient banking services and to contribute socio-economic development of the country. The Bank commenced its operation on June 2, 1999. The Bank provides a broad range of financial services to its customers and corporate clients. The Board of Directors consists of eminent personalities from the realm of commerce and industries of the country. There vision is they would make finest corporate citizen. As their mission, they will become most caring, focused for equitable growth based on diversified deployment of resources, and nevertheless would remain healthy and gainfully profitable Bank. Objectives are to achieve positive Economic Value Added (EVA) each year, to be market leader in product innovation, to be one of the top three Financial Institutions in Bangladesh in terms of cost efficiency, to be one of the top five Financial Institutions in Bangladesh in terms of market share in all significant market segments we serve, to achieve 20% return on shareholders' equity or more, on average.

Standard Bank Limited (SBL) was incorporated as a Public Limited Company on May 11, 1999 under the Companies Act, 1994 and the Bank achieved satisfactory progress from its commercial operations on June 03, 1999. SBL has introduced several new products on credit and deposit schemes. It also goes for Corporate and Retail Banking etc. The Bank also participated in fund Syndication with other Banks. Through all these myriad activities SBL has created a positive impact in the Market. Their Vision is to be a modern Bank having the object of building a sound national economy and to contribute significantly to the Public Exchequer, and they have mission to be the best private commercial bank in Bangladesh in terms of efficiency, capital adequacy, asset quality, sound management and profitability. Objectives are to be a dynamic leader in the financial market in innovating new products as to the needs of the society, to earn positive economic value addition (EVA) each year to come, to top the list in respect of cost efficiency of all the commercial Banks, to become one of the best financial

institutions in Bangladesh economy participating in the most significant segments of business market that we serve.

The City Bank Limited was incorporated as Public Limited Company on the 14th day of March, 1983 under The Companies Act, 1913 (as adopted in Companies Act, 1994) and its shares are listed in the Dhaka Stock Exchange and Chittagong Stock Exchange. The main object is to be leading bank in the country with best practice and highest social commitment. It has 78 branches, 8289 number of shareholders, the authorised capital tk.1750000000, the paid-up capital tk.1080000000 and the total asset amount tk.47445751884 during the year ended December 31,2006.

City Bank is one of the oldest private Commercial Banks operating in Bangladesh. It is a top bank among the oldest five Commercial Banks in the country which started their operations in 1983. The Bank started its journey on 27th March 1983 through opening its first branch at B. B. Avenue Branch in the capital, Dhaka city. It was the visionary entrepreneurship of around 13 local businessmen who braved the immense uncertainties and risks with courage and zeal that made the establishment & forward march of the bank possible. Those sponsor directors commenced the journey with only Taka 3.4 crore worth of Capital, which now is a respectable Taka 330.77 crore as capital & reserve.

ONE Bank Limited was incorporated in May, 1999 With the Registrar of Joint Stock Companies under the Companies Act. 1994, as a commercial bank in the private sector. The Bank is pledge-bound to serve the customers and the community with utmost dedication. The prime focus is on efficiency, transparency, precision and motivation with the spirit and conviction to excel as ONE Bank in both value and image. Their vision Statement to establish ONE Bank Limited as a Role Model in the Banking Sector of Bangladesh and to meet the needs of their customers, provide fulfillment for their people and create shareholder value.

Their mission statement are to constantly seek to better serve their customers, to be pro-active in fulfilling their Social Responsibilities, to review all business lines regularly and develop the best practices in the industry.

BRAC, based in Bangladesh, is (as of May 2010) the world's largest non-governmental development organization. Established by Sir Fazle Hasan Abed in 1972 soon after the independence of Bangladesh, BRAC is present in all 64 districts of Bangladesh, with over 7 million microfinance group members, 37,500 non-formal primary schools and more than 70,000 health volunteers. BRAC is the largest NGO by number of staff employing over 120,000 people, the majority of whom are women. BRAC operates programs such as those in microfinance and education in nine countries across Asia and Africa, reaching more than 110 million people. The organization is 80% self-funded through a number of commercial enterprises that include a dairy and food project and a chain of retail handicraft stores called Aarong. BRAC maintains offices in 14 countries throughout the world, including BRAC USA and BRAC UK. BRAC is a few years into their initiative to operate in ten African countries in the next ten years. BRAC has organized the isolated poor and learned to understand their needs by finding practical ways to increase their access to resources support their entrepreneurship and empower them to become agents of change. Women and girls have been the focus of BRACs anti-poverty approach; BRAC recognizes both their vulnerabilities and thirst for change.

BSA 700: The Auditors Report on Financial Statement (ISA 700)

The purpose of this Bangladesh Standard on Auditing (BSA) is to establish standards and provide guidance on the form and content of the auditors report issued as a result of an audit performed by an independent auditors of the financial statements of an entity. Much of the guidance provided can be adapted to auditors reports on financial information other than financial statements.[paragraph 1 of BSA 700] The auditor should review and assess the conclusions drawn from the audit evidence obtained as the basis for the expression of an opinion on the financial statements.[paragraph 2 of BSA 700] . This review and assessment involves considering whether the financial statements have been prepared in accordance with an acceptable financial reporting framework I being either Bangladesh Accounting Standards (BASs) or relevant national standards or practices. It may also be necessary to consider whether the financial statements comply with statutory requirements.[paragraph 3 of BSA 700]. The auditors report should contain a clear written expression of opinion on the financial statements taken as a whole.[paragraph 4 of BSA 700] BSA 700 has the following major parts regarding audit reports: Basic Elements of the Auditors Report [paragraph 5-26] The Auditors Report [paragraph 27-28] Modified Reports [paragraph 29-40] Circumstances that may Result in other than an Unqualified Opinion [paragraph 41-46]

Basic Elements of the Auditors Report: The auditors report includes the following basic
elements, ordinarily in the following layout: (a)Title (b)Addressee (c)Opening or introductory paragraph: i. Identification of the financial statements audited; ii. A statement of the responsibility of the entitys management and the responsibility of the auditor; (d) Scope paragraph (describing the nature of an audit): (i) A reference to the BSAs or relevant national standards or practices; (ii) A description of the work the auditor performed (e) Opinion paragraph: there should be an opinion paragraph containing

i. Reference to the financial reporting framework used to prepare the financial statements (including identifying the country of origin of the financial reporting framework when the framework used is not Bangladesh Accounting Standards); and ii. An expression of opinion on the financial statements; (f) Date of the report; (g) Auditors address; (h) Auditors signature. A measure of uniformly in the form and content of the auditors report is desirable because it helps to promote the readers understanding and to identify unusual circumstances when they occur. [Paragraph 5 of BSA 700] (a)Title: The auditors report should have an appropriate title. It may be appropriate to use the term. Independent Auditor in the title to distinguish the auditors report from reports that might be issued by others, such as by officers of the entity, the board of directors, or from the reports of other auditors who may not have to abide by the same ethical requirements as the independent auditor. [Paragraph 6 of BSA 700] (b)Addressee: The auditors report should be appropriately addressed as required by the circumstances of the engagement and local regulations. The report is ordinarily addressed either to the shareholders or the board of directors of the entity whose financial statements are being audited. [Paragraph 7 of BSA 700] (c)Opening or introductory paragraph: The following matters are important in this case: (i) The auditors report should identify the financial statements of the entity that have been audited, including the date of and period covered by the financial statements. [Paragraph 8 of BSA 700]

(ii) The report should include a statement that the financial statements are the responsibility of the entitys management and a statement that the responsibility of the auditor is to express an opinion on the financial statements based on the audit. [Paragraph 9 of BSA 700]

(iii)Financial statements are the representations of management. The preparation of such statements requires management to make significant accounting estimates and judgments, as well as to determine the appropriate accounting principles and methods used in preparation of the financial statements. This determination will be made in the context of the financial reporting framework that management chooses, or is required to use. In contrast, the auditors responsibility is to audit these financial statements in order to express an opinion thereon. [Paragraph 10 of BSA 700]

An illustration of these matters in an opening (introductory) paragraph is; We have audited the accompanying balance sheet of the ABC Company as of December31, 20XX, and the related statements of income and cash flows for the year then ended. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit. [Paragraph 11 of BSA 700]

(d) Scope paragraph: The following issues are important in this case: (i) The auditors report should describe the scope of the audit by stating that the audit was conducted in accordance with BSAs. Scope refers to the auditors ability to perform audit procedures deemed necessary in the circumstances. The reader needs this as an assurance that the audit has been carried out in accordance with established standards or practices. Unless otherwise stated, the auditing standards or practices followed are presumed to be those of the country indicated by the auditors address. [Paragraph 12 of BSA 700]

(ii) The report should include a statement that the audit was planned and performed to obtain reasonable assurance about whether the financial statements are free of material misstatement. [Paragraph 13 of BSA 700]

(iii) The auditors report should describe the audit as including: a. Examining, on a test basis, evidence to support the financial statement amounts and disclosures;

b. Assessing the accounting principles used in the preparation of the financial statements; c. Assessing the significant estimates made by management in the preparation of the financial statements; and d. Evaluating the overall financial statement presentation. [Paragraph 14 of BSA 700] (iv)The report should include a statement by the auditor that the audit provides a reasonable basis for the opinion. [Paragraph 15 of BSA 700] (v) An illustration of these matters in a scope paragraph is: We conducted our audit in accordance with Bangladesh Standards on Auditing (BSA). Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. [Paragraph 16 of BSA 700]

(e)Opinion paragraph: The following issues are important in this case: (i) The opinion paragraph of the auditors report should clearly indicate the financial reporting framework used to prepare the financial statements(including identifying the country of origin of the financial reporting framework when the framework used is not Bangladesh Accounting Standards) and state the auditors opinion as to whether the financial statements give a true and fair view (or are presented fairly, in all material respects) in accordance with that financial reporting framework and, where appropriate, whether the financial statements comply with statutory requirements. [Paragraph 17 of BSA 700] (ii) (ii) The terms used to express the auditors opinion are give a true and fair view or present fairly, in all material respects and are equivalent. Both terms indicate, amongst other things, that the auditor considers only those matters that are material to the financial statements. [Paragraph 18of BSA 700]

(iii)The financial reporting framework is determined by BASs, with an appropriate consideration of fairness and with due regard to Bangladesh legislation (Companies Act, Securities & Exchange Rule, Bank companies Act etc.) To advise the reader of the context in which the auditors opinion is expressed, the auditors opinion indicates the framework upon which the financial statements are based. The auditor refers to the financial reporting framework in such terms as: in accordance with Bangladesh Accounting Standards... This designation will help the user to better understand which financial reporting framework was used in preparing the financial statements. When reporting on financial statements that are prepared specifically for use in another country, the auditor considers whether appropriate disclosure has been made in the financial statements about the financial reporting framework that has been used. [Paragraph 19 of BSA 700]

(iv) In addition to an opinion on the true and fair view (or fair presentation, in all material respects), the auditors report may need to include an opinion as to whether the financial statements comply with other requirements specified by relevant statutes or law. [Paragraph 20 of BSA 700]

An illustration of these matters in an opinion paragraph is: In our opinion, the financial statements give a true and fair view of (or present fairly, in all material respects) the financial position of the Company as of December31, 20X1, and of the results of its operations and its each flows for the year then ended in accordance with Bangladesh Accounting Standards (BAS). [Paragraph 21 of BSA 700]

(f)Date of the report: The auditor should date the report as of the completion date of the audit. This informs the reader that the auditor has considered the effect on the financial statements and on the report of events and transactions of which the auditor became aware and that occurred up to that date. [Paragraph 23 of BSA 700] Since the auditors responsibility is to report on the financial statements as prepared and presented by management, the auditor should not date the report earlier than the date on which the financial statements are signed or approved by management. . [Paragraph 24 of BSA 700]

(g) Auditors address: The report should name a specific location, which is ordinarily the city where the auditor maintains the office that has responsibility for the audit. [Paragraph 25 of BSA 700]

(h) Auditors signature: The report should be signed in the name of the audit firm. The auditors report is ordinarily signed in the name of the firm because the firm assumes responsibility for the audit. [Paragraph 26 of BSA 700]

The Auditors Report: The Auditors Report with Unqualified OpinionAn unqualified opinion should be expressed when the auditor concludes that the financial statements give a true and fair view ( or are presented fairly, in all material respects) in accordance with the identified financial reporting framework. An unqualified opinion also includes implicitly that any changes in according principle or in the method of their application, and the effects thereof, have been properly determined and disclosed in the financial statements. [Paragraph 27 of BSA 700] The following is an illustration of the entire auditors report incorporating the basic elements set forth and illustrated above: This report illustrates the expression of an unqualified opinion. [Paragraph 28 of BSA 700]

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The Modified Auditors Report:

According to paragraph 29 of BSA 700, an auditors report is considered to be modified in the following situations: Matters that DO Not Affect the Auditors Opinion i. Emphasis of matter Matters that DO Affect the Auditors Opinion i. ii. iii. Qualified opinion, Disclaimer of opinion, or Adverse opinion.

Uniformly in the form and content of each type of modified report will enhance the users understanding of such reports. Accordingly, BSA 700 includes suggested wording to express an unqualified opinion as well as examples of modifying phrases for use when issuing modified reports. [Paragraph 29 of BSA 700] Matters That Do Not Affect the Auditors Opinion

In certain circumstances, an auditors report may be modified by adding an emphasis of matter paragraph to highlight a matter affecting the financial statements which is included in a note to the financial statements that more extensively discuss the matter. The addition of such an emphasis of matter paragraph does not affect the auditors opinion. The paragraph would preferably be included after the opinion paragraph and would ordinarily refer to the fact that the auditors opinion is not qualified in this respect. [Paragraph 30 of BSA 700] The auditor should modify the auditors report by adding a paragraph to highlight a material matter regarding a going concern problem. [Paragraph 31 of BSA 700] The auditor should consider modifying the auditors report by adding a paragraph if there is a significant uncertainty (other than a going concern problem), the resolution of which is dependent upon future events and which may affect the financial statements. An uncertainty is a matter whose outcome depends on future actions or events not under the direct control of the entity but that may affect the financial statements. [Paragraph 32 of BSA 700]

The addition of a paragraph emphasizing a going concern problem or significant uncertainty is ordinarily adequate to meet the auditors reporting responsibilities regarding such matters. However, in extreme cases, such as situations involving multiples uncertainties that are significant to the

11

financial statements, the auditor may consider it appropriate to express a disclaimer of opinion instead of adding an emphasis of matter paragraph. [Paragraph 34 of BSA 700]

Matters That Do Affect the Auditors Opinion:

An auditor may not be able to express an unqualified opinion when either of the following circumstances exists and, in the auditors judgment, the effect of the matter is or may be matter to the financial statements: a. There is a limitation on scope of the auditors work; or b. There is a disagreement with management regarding the acceptability of the accounting policies selected, the method of their application or the adequacy of the financial statement disclosures. The circumstances described in a. could lead to a qualified opinion or a disclaimer of opinion. The circumstances describes in b. could lead to a qualified opinion or an adverse opinion [paragraph 36 of BSA 700] i. Qualified opinion: A qualified opinion should be expressed when the auditor concludes that an unqualified opinion cannot be expressed but that the effect of any disagreement with management, or limitation on scope is not so material and pervasive as to require an adverse opinion or a disclaimer of opinion. A qualified opinion should be expressed as being except for the effects of the matter to which the qualification relates [ paragraph 37 of BSA 700] ii. Disclaimer of Opinion: A disclaimer of opinion should be expressed when the possible effect of a limitation on scope is so material and pervasive that the auditor has not been able to obtain sufficient appropriate audit evidence and accordingly is unable to express an opinion on the financial statements [ paragraph 38 of BSA 700] iii. adverse opinion: An adverse opinion should be expressed when the effect of a

disagreement is so material and pervasive to the financial statements that the auditor concludes that a qualification of the report is not adequate to disclose the misleading or incomplete nature of the financial statements [paragraph 39 of BSA 700]

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Circumstances that may result in other than an unqualified opinion

Limited on scope A limitation on the scope of the auditors work may sometimes be imposed by the entity (for example, when the terms of the engagement specify that auditor will not carry out an audit procedure that the auditor believes is necessary). However, when the limitation in the terms of a proposed engagement is such that the auditor believes the need to express a disclaimer of opinion exists, the auditor would ordinary not accept such a limited engagement as an audit engagement, unless required by statute. Also, a statutory auditor would not accept such an audit engagement when the limitation infringes on the auditors statutory duties. A scope limitation may be imposed by circumstances ( for example, when the timing of the auditors appointment is such that the auditors is unable to observe the counting of physical inventories). It may also arise when, in the opinion of the auditor, the entitys accounting records are inadequate or when the auditor is unable to carry out an audit procedure believed to be desirable. In these circumstances, the auditor would attempt to carry out reasonable alternative procedures to obtain sufficient appropriate audit evidence to support an unqualified opinion. When there is a limitation on the scope of the auditors work that requires expression of a qualified opinion or a disclaimer of opinion, the auditors report should describe the limitation and indicates the possible adjustments to the financial statements that might have been determined to be necessary had the limitation not existed. Disagreement with management The auditor may disagree with management about matters such as the acceptability of accounting policies selected, the method of their application, or the adequacy of disclosures in the financial statement. If such disagreements are material to the financial statement, the auditor should express a qualified or an adverse opinion. (Paragraph 45of BSA700)

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Basic Elements of the auditors Report City Bank Limited:

Basic Elements of the auditors Report a. Title b. Addressee c. Opening or introductory paragraph i)Identification of the financial statements audited Illustrative auditors Report Report of the Independent Auditor to Shareholders To the shareholders of City Bank Limited

ii) A statement of the responsibility of the entitys management and the responsibility of the auditor d. Scope paragraph( describing the nature of an audit) i) A reference to the ISAs or relevant national standards or practices ii) A description of the work the auditor performed

We have audited the accompanying Balance Sheet of The City Bank Limited as at December 31, 2006 and the related Profit and Loss Account, Statement of Cash Flow and Changes in Equity together with Notes to the financial statement for the year then ended. The preparation of these financial statements is the responsibility of the Bank Management. Our responsibility is to express an independent opinion on these financial statements based on our audit.

We concluded our audit in accordance with Bangladesh Standard on Auditing (BSA). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

e. Opinion Paragraph containing i) A reference to the financial reporting framework used to prepare the financial statements; and ii) An expression of opinion on the financial statements

The financial statements have been prepared in accordance with Bangladesh Accounting Standards (BSA) as adopted by the Institute of Chartered Accountants of Bangladesh (ICAB).

Without qualifying our opinion we draw attention to Note City Bank Limited to the financial statement. Our audit revealed that: i. The bank has provided for tk.36274775 for the liabilities for its employees gratuity scheme as is required

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tk.393092524 under Bangladesh Accounting Standards 19 employee Benefits. ii. The difference of tk.1189404928 has been included under other assets headed City General Adjustment Account in the Bangladesh Accounting Standard. iii. The Bank has not provided for deferred tax liability in accordance with BAS-12 Income Taxes. iv. The Bank has revalued its land from tk.403452645 to tk.735937368. The surplus amount has been taken into Revaluation Reserve. In our opinion, except for the effect on the financial statement of the matters referred to in the preceding paragraph give a true and fair view of the state of the Banks affairs as of December 31, 2005 and of the result of its operations and its cash flows of the year then ended and comply with the bank companies Act 1991, the rules and regulations issued by the Bangladesh Bank, the Companies Act, 1994, the Securities and Exchange Rules 1987 and the other applicable rules and regulations.

Subject to the above, we also report that: i. We have obtained all the information and explanations which to the best of our knowledge and belief where necessary for the purpose of our audit and made due verification thereof; ii. In our opinion, proper book of account as required by law has been kept by the Bank so far as it appeared from our examination of those books and (where applicable) proper return adequate for the purpose of our audit have been received from branches not visited by us; The Balance Sheet and Profit & Loss Account of the company dealt with the report are in agreement with the books of account and returns; The expenditure was incurred for the purpose of the business of the company; The financial position of the bank as at December 31, 2006 and the profit for the year then ended have been properly reflected in the Financial Statement and the Financial Statements have been prepared in accordance with the Generally Accepted Accounting Principles (GAAP); The financial statements have been drown up in conformity with the Bang Company Act, 1991 and in accordance with the accounting rules and regulations issued by the Bangladesh Bank;

iii.

iv. v.

vi.

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vii.

viii.

ix.

The financial statements conform to the prescribed standards set in the accounting regulations issued by the Bangladesh Bank, its a result of consultation of the professional accounting body of Bangladesh; Classification of advances made by the Bank as at December 31, 2006, such provision has been found to be adequate; The records and statements submitted by the branches have been properly maintained and consolidated in the Financial Statements; and The information and Explanations required by us have been received and found satisfactory;

x.

f. Date of the report g. Auditors address h. Auditors signature

April 15, 2007 Zoha Zaman Kabir Rashid & Co. Chartered Accountants (Signed)

BRAC Bank Limited:

Basic elements of the Auditors report (a) Title Auditors report Auditors report

(b) Addressee

to the shareholders of BRAC Bank Limited

(c) Opening or introductory paragraph (i) identification of the financial statements audited We have audited the accompanying balance sheet of BRAC Bank Limited (the Bank) as at 31 December 2007 and the related profit and loss account, cash flow statement and statement of changes in equity for the year then ended, and a summary of significant accounting policies and explanatory notes thereto. The preparation of these financial statements is the responsibility of the banks management. Our responsibility is to express an opinion on these financial statements based on our audit.

(ii) A statement of the responsibility of the entitys management and the responsibility of the auditors

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(d) Scope paragraph (i) A reference to the ISAs or relevant national standards or practices (ii) A description of the work the auditor performed We conducted our audit in accordance with Bangladesh Standards of Auditing (BSA). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion

(e) Opinion containing

paragraph

(i) A reference to the financial reporting framework used to prepare the financial statements; and (ii) An expression of opinion on financial statements

In our opinion, the financial statements prepared in accordance with Bangladesh Standards of Auditing (BSA).

In our opinion, the financial statements prepared in accordance with Bangladesh Standards of Auditing (BSA) give a true and fair view of the state of the Banks affairs as at 31 December 2007 and of the results of its operations and its cash flow for the year then ended and comply with the Bank Companies Act 1991, the rules and regulations issued by the Bangladesh Bank, the Companies Act 1994, the Securities and Exchange Rules 1987 and other applicable laws and regulations.

We also report that i. we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit and made due verification thereof; in our opinion, proper books of account as required by law have been kept by the Bank so far as it appeared from our examination of those books and proper returns adequate for the purposes of our audit have been received from branches not visited by us; the Banks balance sheet and profit and loss account dealt with by the report are in agreement with the books of account and returns. the expenditure incurred was for the purposes of the Banks business; the financial position of the bank at 31 December 2007 and the profit for the year then ended have been properly reflected in the financial statements, and the financial statements have been prepared in accordance with the generally accepted accounting principles; the financial statements have been drawn up in conformity with the Bank Companies Act 1991 and in accordance with the accounting rules and regulations issued by the Banglades Bank; adequate provisions have been made for advances which are, in our opinion, doubtful of recovery; the financial statements conform to the prescribed standards set in

ii.

iii. iv. v.

vi.

vii. viii.

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ix.

x.

the accounting regulations issued by the Bangladesh Bank after consultation with the professional accounting bodies of Bangladesh; the records and the statements submitted by the branches have been properly maintained and consolidated in the financial statements; and the information and explanations required by us have been received and found satisfactory.

(f) Date of the report

Dhaka, 28 January 2008

(g) Auditors address

Chartered Accountants (Full address is not given)

(h) Auditors signature

Rahman Rahman Haque

Mercantile Bank Limited:

Basic elements of the Auditors report (a) Title (b) Addressee (c) Opening or introductory paragraph (i) identification of the financial statements audited Auditors report Independent auditors report to the shareholders to the shareholders of Mercantile Bank Limited

We have audited the accompanying financial statements of Mercantile Bank Limited (the Bank), which comprise the Balance Sheet as of December 31, 2010 and the related Profit and Loss Account, Statement of Cash Flows, Statement of Changes in Equity, Statement of Liquidity Analysis for the year ended, and a summary of significant accounting policies and other explanatory notes. The preparation of these financial statements is the responsibility of the banks management. Our responsibility is to express an opinion on these financial statements based on our audit.

(ii) A statement of the responsibility of the entitys management and the responsibility of the auditors (d) Scope paragraph (i) A reference to the ISAs or relevant national standards or practices (ii) A description of the work the auditor performed

We conducted our audit in accordance with Bangladesh Standards on Auditing, those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedure selected depends on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud and error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the

18

circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence they have obtained is sufficient and appropriate to provide a basis for their audit opinion.

(e) Opinion paragraph containing (i) A reference to the financial reporting framework used to prepare the financial statements; and (ii) An expression of opinion on financial statements

In our opinion, the financial statements have been prepared in accordance with Bangladesh Accounting Standards (BAS) and Bangladesh Financial Reporting Standards (BFRS) in the form prescribed by Bangladesh Bank. In our opinion vide Circular # 14 dated June 25, 2003 give a true and fair view of the state of the affairs of Bank as of December 31, 2010 and of the results of its operations and its cash flows for the year then ended and comply with Banking Companies Act 1991, Companies Act 1994, the Securities and Exchanges Rules 1987 and rules and regulations issued by the Bangladesh Bank and other applicable laws and regulations. We also report thati. we have obtained all information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit and made due verification thereof and found them satisfactory; ii. In our opinion, proper books of account as required by law were kept by the Bank so far as it appeared from their examination of those books and proper returns adequate for the purposes of our audit have been received from branches not visited by us; iii. The records and statements submitted by the branches have been properly maintained and consolidated in the Financial Statements; iv. The Balance Sheet, Profit and Loss Account dealt with by this report are in agreement with the books of account and returns; v. The Financial Statements have been drawn up in conformity with Banking Companies Act 1991 and in accordance with the accounting rules and regulations issued by Bangladesh Bank and Financial Statements conform to the prescribed standards set in the accounting bodies of Bangladesh. vi. The financial position of the Bank as on December 31, 2010 and the profit for the year then ended have been properly reflected in the financial statements, and the Financial Statements have been prepared in accordance with Generally Accepted Accounting Principles (GAAP) as applicable in Bangladesh; vii. Adequate provisions have been made for advances, investments and other assets which are, in their opinion, doubtful of recovery; viii. The expenditures incurred during the year were for the purposes of the business of the Bank; ix. Cash Reserve Requirement(CRR) and Statutory Liquidity Reserve(SLR) with Bangladesh Bank have been maintained

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x.

xi.

xii. xiii. xiv.

as per rule; As far as it was revealed from our test checks , the existing rules and regulation for loan sanctioning and disbursements have been followed properly; It appeared from our test checks that the internal control system was satisfactory and adequate to prevent probable frauds and forgeries; Adequate capital of the Bank, as required by law, has been maintained during the year under audit; Auditors were not aware of any matters, which are required to be brought to the notice of the shareholders of the Bank; 80% of the Risk Weighted Assets have been reviewed spending over 4,024 man-hours.

(f) Date of the report (g) Auditors address (h) Auditors signature

February 20, 2011 Basu Banerjee Nath & co. Chartered Accountants Place: Dhaka (signed)

Standard Bank Limited

Basic Elements of the Illustrative Auditors Report Auditors Report a) Title b) Addressee c) Opening or introductory paragraph 1)Identification of the We have audited the accompanying consolidated financial statement of financial statement audited Standard Bank Limited and its subsidiaries as we;; as financial ; statement of Standard Bank Limited for the year ended 31 December 2010 which comprises the balance sheet and profit and loss account, cash flow statement and statement of changes in equity and the related notes thereto. 2) A statement of responsibility of entitys management the responsibility of auditor the These financial statements are the responsibility of the companys the management. Our responsibility is to express an opinion on these and consolidated financial statements based on our audit. the Report of the Independent Auditor to Shareholder To the shareholders of Standard Bank Limited

d) Scope paragraph ( describing the nature of an

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audit) 1) A reference to the ISAs We conducted our audit in accordance with Bangladesh standards on or relevant national auditing. Those standards require that we comply with ethical standard or practices requirements and plan and perform the audit to obtain the reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amount and disclosures in the consolidated financial statements. The procedure selected depends on the 2) a description of the auditors judgment including the assessment of the risks of material work the auditor misstatement of the consolidated financial statements, whether due to fraud or error. An audit also includes evaluating the appropriateness of performed accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

e) Opinion containing

paragraph

1) A reference to the financial reporting framework used to prepare the financial statements; and

The financial statements are prepared by the company in due conformance with generally accepted accounting principles, procedures and also the applicable International Accounting Standard (IAS) as Bangladesh Standards on Auditing (BSAs).

2) An expression of In our opinion. The financial statements referred to above which has been opinion on the financial prepared in accordance with Bangladesh Financial Reporting Standards statements give true and fair view of the state of affairs of the bank and its subsidiary as at 31 December 2010 and of their financial performance and cash flow for the year then ended and comply with the Companies Act 1994 the Bank Company Act 1991, the rules and regulation issued by Bangladesh bank, the Securities And Exchange Rules 1987 and other applicable laws and regulations. We Also report that a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit and made due verification thereof; b) In our opinion proper books of account as required by law have been kept by the back so far as it appeared from our examination of those books and proper returns adequate for the purposes of our audit have been received from branches not visited by us; c) The records and statements submitted by the branches have been properly maintained and consolidated in the financial statements; d) The balance sheet, profit and loss account dealt with by the report

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f) Date of the report g) Auditors address

are in agreement with the books of account and returns; e) The financial statements have been drawn up in conformity with the Bank Company Act 1991 and in accordance with the accounting rules and regulations issued by the Bangladesh Bank and the financial statements conform to the prescribed standards set in the accounting regulations issued by Bangladesh Bank after consultation with the professional accounting bodies of Bangladesh as per BRPD circular 15 dated 09 November 2009; f) The financial position of the Bank as of Dcember 31, 2010 and the profit for the year then ended have been properly reflected in the financial statements have been prepared in accordance with the generally accepted accounting principles; g) Adequate provisions have been made for advance which are, in our opinion, doubtful of recovery; h) The expenditures incurred during the year were for the purpose of the business of the Bank; i) The information and explanations required by us have been received and found satisfactory; j) Guideline of Core Risk Management issued by Bangladesh Bank vide BROD Circular # 17 dated 7-10-2003 are in the process of implementation. Full compliance of the above guideline is yet to be made; k) 80% of the riskweighted assets have been reviewed spending over 4,500 man hours. March 27, 2011 Howladar Yunus & Co. Chartered Accountants

h) Auditors signature

(Signed)

ONE BANK Basic Elements of the Auditors Report (a) Title Auditors Report (b) Addressee To the Shareholders of ONE Bank Limited. (c)Opening or introductory paragraph 1. Identification of the financial We have audited the accompanying Balance Sheet statements audited of ONE Bank Limited as of 31 December 2007 and the related Profit and Loss Account, Statement of Cash Flows, Statement of changes in Equity and Liquidity Statement together with the Notes- 1 to 48 for the year ended 31 December 2007. 2. A statement of the The preparation of these Financial Statements is the responsibility of the entitys responsibility of the Bank Management. Our management and the responsibility is to express an independent opinion

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responsibility of the auditor (d) Scope paragraph (describing the nature of an audit) 1. A reference to the ISAs or relevant national standards or practices 2. A description of the work the auditor performed

on these Financial Statements based on our audit.

We concluded our audit in accordance with Bangladesh Standards on Auditing (BSA). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Financial Statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall Financial statements presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the Financial Statements have been prepared in accordance with Bangladesh accounting Standards (BAS), give a true and Fair view of the state of the Banks affairs as on 31 December 2007 and of the results of its operations and its cash flows for the year then ended and comply with the Bank Company Act 1991, the rules and regulations issued by the Bangladesh Bank, the Companies Act 1994, the Securities Exchange Rules 1987 and other applicable laws and regulations. We also report thata) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit and made due verification thereof; b) in our opinion, proper books of account as required by law have been kept by the Bank so far as it appeared from our examination of those books and proper returns adequate for the purpose of our audit have been received from branches not visited by us. c) the banks Balance Sheet and Profit and Loss Account together with the annexed notes 1 to 48 dealt with by the report are in agreement with the books of account and returns; d) the expenditure incurred was for the purpose of the Banks Business; e) the Financial Position of the Bank at 31 December 2007 and the Profit for the year then

(e) Opinion paragraph containing 1. A reference to the financial reporting framework used to prepare the financial statements; and 2. An expression of opinion on the financial statements

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(f) Date of the report (g) Auditors address Auditors signature

ended have been properly reflected in the Financial Statements, the Financial Statements have been prepared in accordance with the generally accepted accounting principles; f) the Financial Statements have been drawn up in conformity with the accounting rules and regulations issued by the Bangladesh Bank; g)adequate provisions have been made for advances and other assets which are, in our opinion, doubtful of recovery; h) the Financial statements conform to the prescribed Standards set in the accounting regulations issued by the Bangladesh Bank after consultation with the professional accounting bodies of Bangladesh; i) the records and statements submitted by the branches have been properly maintained and consolidated in the financial statements on the basis of statements certified by the Branch Manager and considered by us as correct. j) the information and explanations required by us have been received and found satisfactory; k) the capital Adequacy Ratio (CAR), as required by law, has been maintained adequately during the year; l) we have reviewed over 80% of the risk weighted assets of the bank and we have spent 2,225 person hours for the audit of books of account and Financial Statements of the Bank. May 6, 2008 ATA KHAN & CO. CHARTERED ACCOUNTANTS (Signed)

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Summary
City Bank
They have audited the annexed Balance Sheet of The City Bank Limited as at December 31, 2006 and its Profit and Loss Account for the year ended as on that date together with accompanying Cash Flow statement and Notes thereto. These financial statements are the responsibility of bank management and our responsibility is to express an independent opinion on these financial statements based on our audit. They concluded our audit in accordance with Bangladesh Standard on Auditing (BSA) as adopted by the Institute of Chartered Accountants of Bangladesh (ICAB). Those standards are required to obtain reasonable assurance about whether the financial statements are free of all material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. Their audit revealed that The bank has provided for tk.36274775 for the liabilities for its employees gratuity scheme as is required tk.393092524 under Bangladesh Accounting Standards 19 employee Benefits, The difference of tk.1189404928 has been included under other assets headed City General Adjustment Account in the Bangladesh Accounting Standard. The Bank has not provided for deferred tax liability in accordance with BAS-12 Income Taxes. The Bank has revalued its land from tk.403452645 to tk.735937368. The surplus amount has been taken into Revaluation Reserve. In their opinion, except for the effect on the financial statement of the matters referred to in the preceding paragraph give a true and fair view of the state of the Banks affairs as of December 31, 2005 and of the result of its operations and its cash flows of the year then ended and comply with the bank companies Act 1991, the rules and regulations issued by the Bangladesh Bank, the Companies Act, 1994, the Securities and Exchange Rules 1987 and the other applicable rules and regulations.

BRAC Bank
They have audited the accompanying balance sheet of BRAC Bank Limited as at 31 December 2007, profit and loss account, cash flow statement, a summary of significant accounting policies, and explanatory notes thereto. The preparation of these financial statements is the responsibility of the banks management and expressing opinion on these statements based on their audit is their responsibility.

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They conducted their audit in accordance with Bangladesh Standards of Auditing (BSA) to obtain reasonable assurance about whether the financial statements are free of material misstatement. They believe that their audit provides a reasonable basis for their opinion.

In their opinion, the financial statements give a true and fair view of the state of the Banks affairs as at 31 December 2007 and comply with the Bank Companies Act 1991, the rules and regulations issued by the Bangladesh Bank, the Companies Act 1994, the Securities and Exchange Rules 1987 and other applicable laws and regulations.

They also report that-

they have obtained all the information and explanations they belief were necessary for the purposes of their audit, proper books of account as required by law have been kept by the Bank, the financial position of the bank at 31 December 2007 and the profit for the year then ended have been properly reflected in the financial statements, adequate provisions have been made for advances which are, doubtful of recovery; the financial statements conform to the prescribed standards set in the accounting regulations issued by the Bangladesh Bank, the statements submitted by the branches have been properly maintained and consolidated in the financial statements; and, the information and explanations required by them have been received and found satisfactory.

Mercantile Bank Limited

They have audited the financial statements of Mercantile Bank Limited which comprise the Balance Sheet as of December 31, 2010 and the related Profit and Loss Account, Statement of Cash Flows, Statement of Changes in Equity, Statement of Liquidity Analysis for the year ended, and a summary of significant accounting policies and other explanatory notes. The preparation of these financial statements is the responsibility of the banks management and the auditors responsibility is to express an opinion on these financial statements based on our audit. They conducted their audit in accordance with Bangladesh Standards on Auditing, those standards require that auditor comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. The auditing procedure selected depends on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud and error. They believe that the audit evidence they have obtained is sufficient and appropriate to provide a basis for their audit opinion. In their opinion, the financial statements have been prepared in accordance with Bangladesh Accounting Standards (BAS) and Bangladesh Financial Reporting Standards (BFRS) in the form prescribed by Bangladesh Bank vide Circular # 14 dated June 25, 2003 give a true and fair view of the state of the affairs of Bank as of December 31, 2010 and of the results of its operations and its cash flows for the year then ended and comply with Banking Companies

26

Act 1991, Companies Act 1994, the Securities and Exchanges Rules 1987 and rules and regulations issued by the Bangladesh Bank and other applicable laws and regulations. They have also obtained all information and explanations, which to the best of their knowledge and belief were necessary for the purpose of our audit and made due verification thereof and found them satisfactory. In their opinion, proper books of account as required by law were kept by the Bank so far as it appeared from their examination of those books and proper returns adequate for the purposes of their audit have been received from branches not visited by them. Cash Reserve Requirement (CRR) and Statutory Liquidity Reserve (SLR) with Bangladesh Bank have been maintained as per rule; and the records and statements submitted by the branches have been properly maintained and consolidated in the Financial Statements. Finally we can say that auditor provide a qualified report about the Bank.

Standard Bank Limited

They have audited the accompanying consolidated financial statements of Standard Bank Limited which comprises the balance sheet, profit and loss account, cash flow statements, and statements of changes in equity and the related notes thereto of the year ended 31 December 2010. Management of Standard Bank Limited is responsible for the preparation of consolidated financial Statements that give true and fair view in accordance with Bangladesh Financial Reporting Standards and the guideline of Bangladesh bank. Auditor responsibility is to express an opinion on these consolidate financial statements based on their audit. They conducted their audit in accordance with Bangladesh standards on auditing. An audit involves performing procedures to obtain audit evidence about the amount and disclosures in the consolidated financial statements. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management. The financial statements are prepared by the company in due conformance with generally accepted accounting principles, procedures and also the applicable International Accounting Standard (IAS) as Bangladesh Standards on Auditing (BSAs). They have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit and made due verification thereof. The financial position of the Bank as of December 31, 2010 and the profit for the year ended have been properly reflected in the financial statements. The balance sheet, profit and loss account dealt with by the report is in agreement with the books of account and returns. The expenditures incurred during the year were for the purpose of the business of the Bank. The financial statements have been drawn up in conformity with the Bank Company Act 1991 and in accordance with the accounting rules and regulations issued by the Bangladesh Bank and the financial statements conform to the prescribed standards set in the accounting regulations issued by Bangladesh Bank after consultation with the professional accounting bodies of Bangladesh as per BRPD circular 15 dated 09 November 2009. The information and explanations required by them have been received and found satisfactory.

In their opinion, except for the effect on the financial statement of the matters referred to in the preceding paragraph give a true and fair view of the state of the Banks affairs as of December 31, 2010 and of the result of its operations and its cash flows of the year then ended and comply with the bank companies Act 1991, the rules and regulations issued by the Bangladesh Bank, the Companies Act, 1994, the Securities and Exchange Rules 1987 and the other applicable rules and regulations.

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One Bank
Auditors have audited the accompanying Balance Sheet of ONE Bank Limited as of 31 December 2007 and the related Profit and Loss Account, Statement of Cash Flows, Statement of changes in Equity and Liquidity Statement together with the Notes- 1 to 48 for the year ended 31 December 2007. The preparation of these Financial Statements is the responsibility of the Bank Management and their responsibility is to express an independent opinion on these Financial Statements based on our audit. Auditors concluded their audit in accordance with Bangladesh Standards on Auditing (BSA). It also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statements presentation. They believe that their audit provides a reasonable basis for their opinion. In our opinion, the Financial Statements have been prepared in accordance with Bangladesh accounting Standards (BAS), give a true and Fair view of the state of the Banks affairs as on 31 December 2007 and of the results of its operations and its cash flows for the year then ended and comply with the Bank Company Act 1991, the rules and regulations issued by the Bangladesh Bank, the Companies Act 1994, the Securities Exchange Rules 1987 and other applicable laws and regulations. They have obtained all the information and explanations which to the best of their knowledge and belief were necessary for the purpose of our audit and made due verification thereof. In their opinion, proper books of account as required by law have been kept by the Bank so far as it appeared from our examination of those books and proper returns adequate for the purpose of their audit have been received from branches not visited by them. Besides, the capital Adequacy Ratio (CAR), as required by law, has been maintained adequately during the year and the financial statements conform to the prescribed Standards set in the accounting regulations issued by the Bangladesh Bank after consultation with the professional accounting bodies of Bangladesh. Finally we can say that auditor provides an unqualified opinion about the bank in their report

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Conclusion

In the term paper the rules and regulation of BSA 700 has been focused based on audit reports. We have shown the impact and the implementation of these rules in the financial report of five banking companies.

The auditors report should contain a clear written expression of opinion on the financial statements taken as a whole. BSA 700 has the major parts regarding audit reports, basic elements of the auditors report, the auditors report, modified reports, circumstances that may Result in other than an unqualified opinion. In this report mainly the basic elements of the financial reports have been discussed. All eight elements are present in the auditors report of all the banking companies. So it means that they follow the rules of BSA 700 very strictly.. In this report, it has been found that only in case on the auditors report of the city bank and the standard bank, the opinion of the auditor was qualified. All others report given by the auditors was unqualified. In the report all the elements of the report have been identified. The summary of the reports have also been given.

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Reference
ICMAB manual http://bankinfobd.com/banks/3/BRAC_Bank http://www.google.com/imgres?q=ONE+bank+limited&hl=en&sa=X&tbm=isch&prmd=ivns&tb nid=KzY5nqo2MgqLlM:&imgrefurl http://www.bracbank.com/reports.php http://ONE+bank+limited&hl=en&biw=1280&bih=886&prmd=ivns&source=lnms&tbm=isch&e i=OC5jTselFKbY0QH888T8CQ&sa=X&oi=mode_link&ct=mode&cd=2&ved=0CAgQ_AUoA Q http://www.onebankbd.com/dp.php https://www.thecitybank.com.bd/ http://www.standardbankbd.com/ http://www.mblbd.com/ http://City+bank+limited&oq=City+bank+limited&aq=f&aqi=g10&aql=&gs_sm=e&gs_upl=658 107l662758l0l666216l17l11l0l0l0l0l2333l5763l0.1.0.1.7-1.1.1l5l0 http://www.bracbank.com/company_profile.php http://www.standardbankbd.com/index.php/about/mission http://www.mblbd.com/about_mbl/vision.php https://www.thecitybank.com.bd/home.php http://www.onebankbd.com/ https://www.thecitybank.com.bd/annual_reports.php http://www.onebankbd.com/about-obl.php https://www.thecitybank.com.bd/management.php http://www.bracbank.com/

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