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Internship Report

Autumn 2012

Submitted to: Chowdhury Rajkin Mohsin

Investigation of Low Student Allowances in

Chartered Accounting Firms in Bangladesh

Submitted by: Sharjil H. Ali

ID: 0710105

Faculty: Business

Independent University, Bangladesh (IUB)


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To

Mr. Chowdhury Rajkin Mohsin

LecturerSchool of Business

Independent University, Bangladesh (IUB)

Bashundhara

Date: 29thNovember, 2012

Subject: Letter of Transmittal

Dear Sir,

I feel pleased to submit my internship research paper on Investigation of Low Student

Allowances in Chartered Accounting firms in Bangladesh.

This paper fundamentally questions the quality of audit performance by students in CA firms in

Bangladesh despite the meager wages paid to articled students. It also points out the difficulties

of CA firms in recruiting the brightest accounting students into this profession and the reasons

for such phenomenon. It gives an overview of the supposed loopholes in the system placed by

the Institute of Chartered Accountants of Bangladesh (ICAB) from the students perspective.

I would further like to thank your honour for providing me with the opportunity to critically

explore and analyze the problem described above in the real life scenario of the problem; and I

am grateful to you for the value addition I have undergone while working on this paper.

Yours Faithfully

________________

Sharjil H. AliID: 0710105

Internship Student


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SI Table of Content Page No.

Acknowledgement 4

Executive Summary 5

1.0KPMG Global1.1History 61.2At a glance 6-71.3Values 71.4Culture 81.5Organization 8-91.6Performance 9

2.0Rahman Rahman Huq (KPMG)2.1About RRH 102.2Mission Statement 112.3Values 112.4Services 11-122.5Industries 13-142.6Corporate Governance 142.7RRH Organogram 15

3.0Internship Experience 16-184.0Introduction 19

4.1Purpose of Study 19-214.2Significance of Study 21-224.3Problem Statement 224.4Research Questions 22-23

5.0Literature Review 246.0Methodology 257.0Conclusion 268.0Appendix 27-309.0References 31


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ACKNOWLEDGEMENT

Despite all the toil and effort I have put into this report, putting this paper together would not

have been possible without the help of many individuals.

I would like to take this opportunity to thank Mr. Chowdhury Rajkin Mohsin, my internship

supervisor at IUB who has guided me throughout this report.

I remain ever grateful to Ms. Adneen Hussain, assistant manager at KPMG, to whom I had to

report at the firm. She has been generously kind to me during my three months internship period

and has helped me out in every way possible in preparing this paper. Also, I would like to

convey special thanks to Mr. Anwar, senior audit assistant at KPMG under whose direct

supervision I worked for almost 6 weeks. A huge credit goes to him for all that I have learned

during my internship.

Lastly, I would like to thank all the articled students at KPMG who have helped me write thisreport based on their various insights.


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EXECUTIVE SUMMARY

The purpose of this paper is to propose a study on the low allowances paid to full-time articled

students by CA firms in Bangladesh and how that prevents the best and brightest students (from

families with limited means) from coming into this profession. It also questions the ethics of

these CA firms who rely on their talent pool heavily for the service they provide to their clientsand compensate their talent pool so poorly.

Despite the fact that CA articled students are the most crucial resource of a Chartered

Accounting firm, no studies have been conducted in this particular area from the students

perspective. CA articled students are mostly graduates who have completed either a Bachelors or

a Masters degree and after all these years of study, they have to work for a CA firm for another 3

years at very low allowances to achieve the CA designation. Being hired on a full-time basis,

these students give up on the opportunity cost of getting a job that will pay them eight to ten

times higher than the allowances paid by CA firms.

Furthermore, the ultimate output of a CA firm, assurance regarding financial statements, is

audited by the students. The students are expected to possess high levels of integrity and there is

no compromise with the quality of their performance. Also, this job entails great responsibility

and accountability. Despite such huge requirements for this job, the compensation for this job is

barely justifiable.


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1.0 KPMG GLOBAL

1.1 HISTORY

The KPMG network was formed in 1987 when Peat Marwick International and Klynveld Main

Goerdeler merged along with their respective member firms. Speaking of the principal founding

members, there were four key figures in the formation of KPMG. They are the founding

members of the present organization:

Klynveld

Piet Klynveldfounded the accounting firm Klynveld Kraayenhof & Co in Amsterdam in 1917.

Peat

William Barclay Peatfounded the accounting firm Peat & Co in London.

Marwick

James Marwickestablished the accounting firm Marwick, Mitchell & Co in New York City in

1897.

Goerdeler

Dr. Reinhard Goerdelerwas the first president of the International Federation of Accountantsand a chairman of KMG. He is credited with laying the foundations of the Klynveld Main

Goerdeler merger.

1.2 AT A GLANCE

KPMG international operates as a network of member firms offering audit, tax and advisory

services. We work closely with our clients, helping them to mitigate risks and grasp

opportunities. Member firms' clients include business corporations, governments and public

sector agencies and not-for-profit organizations. They look to KPMG for a consistent standard ofservice based on high order professional capabilities, industry insight and local knowledge.

KPMG member firms can be found in over 152 countries. Collectively they employ more than

145,000 people across a range of disciplines.

Sustaining and enhancing the quality of this professional workforce is KPMG's primary

objective. Wherever we operate we want our firms to be no less than the professional employers

of choice.


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We contribute to the effective functioning of international capital markets. We support reforms

that strengthen the markets' credibility and their social responsibility. We believe that similar

reform must extend to the professional realm.

1.3 VALUES

Our values create a sense of shared identity within the KPMG organization, which is a network

of member firms in over 152 countries. They define what we stand for and how we do things.

Our values help us to work together in the most effective and fulfilling way. They bring us closer

as a global organization.

We lead by exampleAt all levels we act in a way that exemplifies what we expect of each other and our member

firms' clients.

We work together

We bring out the best in each other and create strong and successful working relationships.

We respect the individual

We respect people for who they are and for their knowledge, skills and experience as individuals

and team members.

We seek the facts and provide insight

By challenging assumptions and pursuing facts, we strengthen our reputation as trusted and

objective business advisers.

We are open and honest in our communication

We share information, insight and advice frequently and constructively and managing tough

situations with courage and candor.

We are committed to our communitiesWe act as responsible corporate citizens by broadening our skills, experience and perspectives

through work in our communities and protecting the environment.

Above all, we act with integrity

We are constantly striving to uphold the highest professional standards, provide sound advice

and rigorously maintain our independence.


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1.4 CULTURE

KPMG member firms are helping businesses respond to changes in the global economy. We arealso committed to providing an environment where our people can flourish and contribute to a

sustainable world. The KPMG culture is rooted in our values. Our integrity and policy of open

and honest communication builds trust and collaboration, while our flexibility and diversity

creates a culture in which people share knowledge freely, bringing out the very best in each

other. Asked why they choose to work with KPMG member firms, many clients talk about our

high level of professional ethics, our loyalty and our approachability.

Our culture extends beyond good business practice. We are also recognized for the efforts we

make to alleviate poverty, support education and protect the environment around the world.

KPMG member firms work diligently with other companies, governments and non-governmentorganizations to address these problems and make a positive difference in peoples health,

welfare and prosperity.

Our employees benefit from this forward-thinking approach. A critical element of KPMGs

global vision is to be recognized as employers of choice to recruit, retain and develop the

very best people. This allows our people to flourish both as professionals and as individuals to

enjoy a challenging career and get the most from their personal lives. They do so knowing that

they are part of a responsible and positive culture that extends beyond them into the greater

business, social and natural environment.

1.5 ORGANIZATION

KPMG firms are some of the worlds leading providers of audit, tax and advisory services. They

operate in 152 countries and have 145,000 people in all member firms around the world with

more than 7,900 partners. We aim to respond to the complex business challenges facing our

clients. We adopt a global approach spanning professional disciplines, industry sectors and

national borders. We are organized around our Audit, Tax and Advisory practices.

Audit

Audit is an independent service that enhances the reliability of information used by investors and

other stakeholders.

Tax

Attitudes to tax are changing. Organizations of all sizes are ever more exposed to new trends in

tax regulation, not just locally but globally.


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Advisory

Advisory works with the worlds leading organizations to create and protect the sustainable

value of their business/or organization focusing in the areas of Management Consulting, RiskConsulting and

1.6 PERFORMANCE

Combined revenues for KPMG member firms totaled $22.7 billion for the fiscal year ending

September 30, 2011, a 10.1 percent increase in U.S. dollars, or 6.2 percent in local currency

terms. Revenues grew across all of KPMGs geographic regions, with gains in U.S. dollars of

16.6 percent in Asia Pacific, 10.7 percent in the Americas, and 7.7 percent in Europe, the Middle

East, Africa, and India.

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

2008 2009 2010 2011

KPMG Growth Figures

KPMG Global KPMG Asia KPMG Bangladesh


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2.0 RAHMAN RAHMAN HUQ (KPMG)

2.1 ABOUT RRH

In 1962, when Price Waterhouse Peat & Co. left Pakistan, one of its former partners Mr. Rezaur

Rahman joined forces with two other chartered accountants Mr. M. Saifur Rahman and Mr.

Tasfin I. Huq to form Rahman Rahman Huq.

Rahman Rahman Huq (hereinafter referred to as RRH or KPMG or the Firm) is a Member Firm

of KPMG International. RRH takes pride in being the only Member Firm in Bangladesh of any

of the Big 4 global accounting firms. Member Firm status is the highest level of affiliation

offered by such global firms. This formally establishes RRH as the premier accounting firm in

Bangladesh. This status is positioned on top of our reputation built over the last half a century by

providing services to our clients with sound technical knowledge, combined with

uncompromising integrity, objectivity and independence.

KPMG is a global network of professional firms providing Audit, Tax and Advisory services.

We have 138,000 outstanding professionals working together to deliver value in 150 countries

worldwide.

The practice is headed by Mr. Adeeb H. Khan. All partners are the members of the Institute ofChartered Accountants in England & Wales (ICAEW) and the Institute of Chartered Accountants

of Bangladesh (ICAB).

New legislation and regulations, market conditions and changing needs require a constant

revisioning of services and processes. We and the KPMG network invest considerably in

enhanced methodology both domestically and internationally, in order to continue to provide

clients with a level of service that aims to meet or exceed their expectations.

Operating from offices in Dhaka and Chittagong, we employ around 250 people. The firm, the

partners and personnel who work for it and the processes under which we operate are governednot just by a strict code of ethics, but also by an elaborate risk management structure. We have

an IT Wing manned by professionals with the qualification and experience necessary to meet the

diverse needs of client. Please see the Table 2.1.1 for our resource strength.

Our ambition is to continue to recruit some of the best talent entering this profession, train them

in an environment of technical and ethical excellence to meet the highest expectations of clients

in this age of continually evolving multi-dimensional challenges.


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2.2 MISSION STATEMENT

Outstanding professionals, working together to deliver value.

2.3 VALUES

Our values are:

We lead by example

We work together

We respect the individual

We seek the facts and provide insight We are open and honest in our communication

We are committed to our communities

Above all, we act with integrity

2.4 SERVICES

RRH/KPMG in Bangladesh offers high-quality services in the field of Audit, Tax and Advisory.

We give advice on how to improve performance and manage risks, we supervise transactions

(mergers, acquisitions, due diligence investigations) and are active in the field of control and

accounting. Our organization is structured as follows:

Audit

The review of financial accounts intended for third parties has traditionally been one of our core

activities. This often involves specific issues and legislation and regulations, for which we offer

appropriate services. Listed companies, in particular, are subject to strict legislation and

regulations. They choose RRH/KPMG because of its in-depth specialist knowledge in the field

of accounting principles and rules. Key audit services are:

Financial Statements Audit

Internal Audit

Tax

RRH/KPMG in Bangladesh provides tax services to both large and medium-sized organizations

and their stakeholders. RRH/KPMG in Bangladesh is active in all the different areas of the tax


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profession. Key tax services are:

Corporate and Business Tax Tax Planning and Strategies

Indirect Tax

Mergers and Acquisitions

Global Tax Outsourcing

Personal Tax (local and expatriate)

Business Process Outsourcing (BPO)/Business Support Services (BSS)

- Complete management for every day Income Tax and VAT compliance

Advisory

RRH/KPMG in Bangladesh provides a number of specialised advisory services. Key advisory

services are:

IT Advisory

- IT Attestation

- IT Project Advisory

- IRM in External and Internal Audits

- IT Strategy and Performance

- IT Sourcing Advisory

- Information Protection and Business Continuity Advisory

- IT Architecture and Infrastructure

Accounting Advisory Services including financial statements reconstruction

Management Assurance Services

- Regulatory Compliance Review

- Corporate Governance Advice e.g. internal audit restructuring, audit committee structuring,

etc.

- Forensic e.g. fraud investigations

Corporate Finance (valuations)

Transaction Services- Due Diligence (Buy-side Assistance)

- Due Diligence (Sell-side Assistance)

- Capital Markets

Business Process Outsourcing (BPO)/Business Support Services (BSS)

- Bookkeeping and payroll services

- Accounting support

- Regulatory reporting


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2.5 INDUSTRIES

KPMG Internationals member firms have clustered market and sector know-how as follows:

Financial Services

Capital Markets

Retail Banking

Insurance

Investment Management

Leasing, Specialised Finance, etc.

Industrial Markets

Automotive Chemicals & Performance Technologies

Diversified Industrials

Energy and Natural Resources

Pharmaceuticals

Consumer Markets

Food and Drink

Consumer Goods

Retail

Technology, Media & Telecommunications

Telecommunications

Media

Technology

- Electronics

- Software

- Services

Travel, Leisure and Tourism

Infrastructure, Government and Healthcare

Building, Construction

Educational Institutions

Government & Public Sector

Transport & Logistics

Healthcare

Professional & Business Services


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Miscellaneous

2.6 CORPORATE GOVERNANCE

RRH is wholly owned and managed by its partners. One partner is specifically responsible for

financial discipline and reporting.

We report into KPMG Middle East & South Asia (MESA) sub-region.

We are subject to KPMG Internationals Quality Performance policies and procedures.

Table 2.1.1

105

126

156

206

1727

3544

8 14 1522

2008 2009 2010 2011

RRH (KPMG) Resource Strength

Ari!led "#dens $&lo'ees Adinsrai(e "a))


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2.7 RRH ORGANOGRAM

Senior Partner

PartnePartner

Audit

Senior Manager

Director

Advisory Taxation IT & IRM Corporate

Affairs

Semi-senior

Auditors

Audit Supervisors

Senior Supervisor/

Assistants

Managers Senior Manager

Junior Auditors

Managers

Assistant

Mana ers

Senior

Associates

IT Officers

IT Officers

Managers

Supervisors

Assistants

Officers

Manager

Officer


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3.0 INTERNSHIP EXPERIENCE

To start with the one very important requirement I was expected to possess while interning at

Rahman Rahman Huq (KPMG) - integrity, I feel obliged to confess to the readers that I had to

spend about half an hour referring to my dictionary to find a word that aptly described my

experience at KPMG.

It has been an invigorating yet strenuous three months during which expectations met their

realities and so much more than that. A popular stereotype, internships were always projected as

a point of time in every students career when he/she would expect to find themselves stapling an

awful lot of papers and making coffee for his/her coworkers. Lucky for me, my office had a

coffee vending machine and surprisingly, my coworkers liked stapling their own papers. It all

started for me when I was called by a KPMG personnel confirming my place in the firm as an

intern a week after I dropped my resume, advising me to join from the 26 thof August, 2012 for a

three month period.

RRH is a chartered accounting firm in Bangladesh which was established in 1962 and it is the

only member firm of a Big-4 (KPMG) in Bangladesh. Its head office is located in Hosaf Tower

in Mohakhali C/A and it also has a branch office in Chittagong.

My first day passed getting introduced to the office staff and the CA articled students whoseemed to be the greater number in the office. For the next few days, I found myself sitting back

and doing absolutely nothing from 9:30a.m. to 6:00p.m; at this point of time even making coffee

seemed more appealing than anything else. Finally, on the last day of my joining week, I was

told by my supervisor at work that I had been allocated to an audit assignment and I should make

myself familiar with Mr. Marzuki, my senior at this audit assignment. It had turned out by a

coincidence that Mr. Marzuki was one of my friends cousins, a friend who had recently told me

about this cousin of his who was also working at KPMG as an audit admin officer. This veritably

helped me get along with my senior better than I had expected. From the next week, I had to go

straight to the clients office, namely Sumitomo Corp., located in the Ruposhi Bangla Hotel

Annex-2 in Shahbagh. I started to realize that once we were assigned to an audit, we no longerhad to visit our own office but instead go directly to the clients premise for as long as the audit

was undergoing. Furthermore to my realization, at the clients office, we were treated with a

prodigious amount of respect and it seemed as though the clients staff was intimidated by our

presence. The reason for this was that we were there to investigate their work and find their

mistakes, giving us an edge over the clients staff. Also, the clients staff are strictly ordered to

provide us with everything we need giving us a rather authoritative position to our disposal.

Soon enough, I found myself referring to myself as an auditor which in itself was a marvelous

feeling.


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This being my first audit was the audit of the employees Provident Fund of a Japanese firm,

Sumitomo Corp. and it lasted for about one and a half weeks. During this time, I got an inauguraltaste of audit whilst learning some very useful things like linking, tagging, and filing audit

documents. However, I believe the most important lesson during my first audit was to

acknowledge that fact that investigating financial statements was all about confirming how the

figures were derived and collecting enough proof in documentation to support these figures.

It was barely a week after finishing my first audit and I was already assigned to my next audit

assignment. Once more, the manager under whose supervision I worked during my internship

informed me about my new audit and told me to make myself familiar with Mr. Anwar, a senior

CA articled student at the firm who would be guiding me in the next audit. This time, I was

assigned to the real deal an annual audit of a consultancy firm, CEGIS (Centre forEnvironmental and Geographical Information System). Since the firm was a consultancy firm

with limited transactions, only two auditors, including me, were assigned for this audit and we

were expected to finish the audit within approximately eight weeks. For the next almost 2

months, I was working at the clients office in Gulshan-1. Working at the clients premise was

much more enjoyable, and time passed with the wink of an eye with all the tasks we had

pending. However, there were days more often than not when I found myself working with my

senior till 8-9pm at the clients office. Although my senior told me that this was a very common

phenomenon, I believe another reason for this was the fact that at CEGIS, the head of the

Finance and Accounts Department was a part-time employee and came to the office after 5p.m.

Now, there were a lot of issues that could be only be explained by him and this was one reason

that would hold us back at the office after hours. At a more personal level, I started to get along

with my senior and the employees at the clients accounts office and found myself enjoying

office more than I had expected. A very important thing about work environment is the people

we work with, and once we can overcome that obstacle, the workplace seems to be much more

pleasant. Now, when I am almost at the end of my internship period and done with the audit of

CEGIS, I miss the good times I had sitting and chatting up with my coworkers at CEGIS, a client

where I had spent the bigger part of my internship period.

Speaking of my responsibilities as an auditor at this assignment, I was entrusted with much moreresponsible work than the last audit, from vouching for assets and expenses, preparation of

worksheets of FDR and other bank account interest calculations, physical asset verification of the

client, preparation of bank confirmations, various control tests, depreciation logic test, IT/VAT

adjustments and adherence to other Finance and Procurement Policies, and much more. The

annual audit of CEGIS gave me a holistic overview of an annual audit and the various work

papers and tests that need to be conducted during an audit. After completion of our work at the

clients office, we came back to our firm and worked on this assignment at RRH premises for the

next two weeks. During these two weeks, there were many instances when I had to run back to


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CEGIS to obtain additional papers or perform tests that the manager in-charge suggested after

reviewing our workings. Interestingly, towards the end of the review of this audit, my senior got

assigned to another audit and had to be released from the CEGIS audit. This brought the entireresponsibility and accountability of the CEGIS audit on my shoulders. The feeling was

somewhat exciting but also daunting, given the fact that I had been working as an auditor for

barely ten weeks. Lastly, I was asked to prepare the ML (Management Letter), a document that

sums up the mistakes and errors in the clients accounts. This made me feel particularly more

responsible as the ML was something that was generally prepared by the very senior students or

the audit supervisors of any particular audit assignment. To be entrusted with such work was

overwhelming and gave me a good feeling about my time and effort at KPMG.

It is also worth mentioning that during my stay at KPMG, I had the privilege to attend a 2-day

Induction Training at the Rigs Inn in Gulshan-1, training intended for all the new students thatjoin the firm in a particular year. In this training, we were briefed about KPMG Global, the

history of RRH and what it stands for, and our responsibilities as auditors. All three partners of

RRH were present at this event to share their experiences and values with us. This event gave us

an opportunity to interact with them at a personal level and feel inspired in so many ways.

To sum up, my internship experience at KPMG was brilliant and I have filled my empty cup with

so many lessons that I take away with me. Apart from that, I aspire to pursue Chartered

Accounting as a profession in the future and this experience will certainly give me a head start in

my professional career in the future when I start off as an articled student. Besides, interning at a

Big-4 firm has been the most valuable addition to my resume.


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4.0 INTRODUCTION

Recruiting qualified accounting staff is a challenging process for most CA firms in Bangladesh.In particular, recruiting the best and brightest accounting students who are qualified to pursuecareers at either Big 4 or non-Big 4 accounting firms is an intensely competitive endeavor. Yet,despite the importance of recruiting accounting professionals in CA firms, little academicresearch has examined this issue from the students perspective. This paper proposes to examinethe reasons why some accounting students seek careers at CA firms while others enter the jobmarket or pursue other degrees and whether the allowances paid by CA firms in Bangladesh hasa bearing on this decision of students.

Bangladesh is an emerging economy and international audit firms operate here through affiliated

local audit firms. The Bangladesh audit market can be characterized as an intensely competitivesmall audit market with relatively poor demand for high-audit quality. In addition, Bangladesh

has a relatively small and under developed but growing capital market that is characterized by

poor corporate regulation and weak investor protection. As a result, the audit fees charged by CA

firms here is significantly low which causes the firms to pay very meager allowances to its

articled students, who happen to be the most valued resources of a CA firm. However, the

question arises that can such low allowances, which do not even allow students to sustain their

living costs in the city, be justified by low audit fees earned by the firms.

4.1 PURPOSE OF THE PROPOSED STUDY

The purpose of proposing this study entails to the fact that despite opportunities presented by this

very promising profession, many students fail to pursue a career in Chartered Accountancy for

unavoidable reasons. The goal of any firm is to attract the most talented human resources for

they determine the performance of an organization. However, it terms of the CA firms in

Bangladesh, the benefits and remuneration offered to articled students is barely considerable.

Research revealed that in most other countries, CA/CPA firms completely sponsor its articleship

students and treat them as employees. In other words, the firms pay for all the examination fees,

registration fees, etc and also pay the graduates a decent salary. In fact, they are hired as full-timeemployees to whom the firm provides CA support along with a salary that is slightly below the

average national graduate salary. As per the Big 4 firms, they pay its employees much above the

graduate national salary to attract the best and the most talented graduates (Appendix-3). A

comparison between the salaries/allowances paid to individuals pursuing the CA designation in 3

different cities reveals the true picture of the exploitation of CA articled students in Bangladesh.


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Table 4.1.1

Apart from the fact that allowances paid in Bangladesh are beyond recognition on a graph, CA

articled students in Bangladesh have to pay for all of their CA related expenditure and it turns

out that the minimum allowance set byInstitute of Chartered Accountants in Bangladesh (ICAB)

exceeds the total allowance received by the students in 3 years (Appendix-1).

*+

*10,000

*20,000

*30,000

*40,000

*50,000

*60,000

*70,000

KPMG "'dne' $arnes - o#ng

/orono

KPMG haa Mini# se b' AB

Salaries/Allowances per annum

1s ear 2nd ear 3rd ear


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Now, one may try to justify the low allowances with the fact that the audit fees paid to CA firms

in Bangladesh is also very low; but that is exactly why a study should be conducted to see if such

claims are justifiable. The top few CA firms in Bangladesh, including the Big 4 associates andmember firms, dominate the audit market here. Furthermore, these few firms hold the biggest

clients and most of the multi-nationals. However, the allowances paid by the top CA firms in

Bangladesh vary slightly from those paid by the medium and small CA firms whose profits are

less than the top firms (Appendix-2).

Table 4.1.1

From the table above, RRH (KPMG) growth statistics show a steady growth over the past 4

years with increases in its revenue and profits but no corresponding increase in the studentallowances paid over the years.

4.2 SIGNIFICANCE OF THE PROPOSED STUDY

A discussion with a group of accounting students revealed a variety of reasons that pointed out

that low allowances were one of the major reasons for them not pursuing the CA professional

degree. They pointed out that after passing BBA and MBA, they are expected to support their

families financially, as by the time students reach that age their parents have or are going to

retire. Veritably, in such circumstances, pursuing a profession without almost any pay for the

next 3 years (assuming a student passes in all the levels) does not deem as practical.

Also, as most of the best CA firms are situated in Dhaka city, students from other cities who

wish to pursue the profession need to sustain in Dhaka city bearing all the living costs. However,

this is only possible for those students who come from a family of means, but for those who do

not have any financial support, the allowances paid by the firms here are not even enough to

cover for their living expenses, let alone anything else.

0.00%

2.00%

4.00%

6.00%

8.00%

2008 2009 2010 2011

%G

rowth

Revenue Growth vs Allowances Growth

KPMG e(en#e Groh

"#den Alloan!es Groh


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Some students also pointed out that most individuals have a mindset of getting married within

the age of 30. This means that after finishing their post graduation, which for some students is as

late as 27-28, pursuing an unpaid profession for another 3 years just does not seem pragmatic,especially given the uncertainty of not passing the CA professional examinations after all. The

passing percentage of Advanced Level-Case Study, the last level of CA examination is less than

1% in Bangladesh.

4.3 PROBLEM STATEMENT

Accounting firms rely heavily on their talent pool. It is very necessary to develop a dedicated and

diligent workforce. They are not only responsible for delivering the results but also can help thefirm in striking a long lasting relationship with clients. Their compensation, thus, becomes a

central area of concern as compensation is usually linked to performance. In such circumstances,

do such low allowances (Appendix-2) of articled students assure the integrity of their

performance?

In most CA firms, the audits are conducted by the articled students under the guidance of the

audit supervisors and managers meaning the actual output of assurance that is delivered to clients

rests on the performance of the students. Furthermore, articled students in CA firms are

employed by the firm full-time, and more often than not, they have to work overtime to meet

audit closing deadlines. Apart from these, the students have to also attend classes in the Institute

of Chartered Accountancy of Bangladesh (ICAB) in Kawran Bazar and study for their

examinations. Once again, a question of ethics arises on the part of the CA firms paying such

low compensation (Appendix-2) to students for a full-time job with very high quality

expectations.

4.4 RESEARCH QUESTIONS

(a)Do low allowances paid by Chartered Accounting firms in Bangladesh have a bearing onthe decision of accounting students in joining the profession?

As discussed above, the low allowances paid to CA articled students affects the decision of

graduates to join CA as a profession at many different levels. These include the fact that the

allowances do not even allow them to cover their own living expenses; they can always get a

job that will pay them 8 times the allowance (Appendix-4); the passing percentage of CA

examinations is so low that there is a high possibility that they might not even be able to

achieve the degree after all, after having worked for a minimum three years at such a low

wage.


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(b)Do low allowances of CA articled students affect their motivation and performance?

The service that CA firms provide, that of assurance of the financial statements being validlyprepared, is critically analyzed by the articled students who go to audit these financial

statements. Thus, the articled students perform the most crucial part, and thus, their

remuneration should be reasonably determined, especially when high quality performance

and utter integrity is expected of them. Low allowances will certainly entice the students to

perform their job poorly and may also tempt them to turn to unethical behavior, which can be

very damaging to the firms goodwill.

(c) Is it ethical for CA firms to employ articled students full-time and yet pay them such lowsalaries?

The top CA firms in Bangladesh make profits annually that can be accounted for in 9 digit

figures; in spite of such profits, the allowances they pay students is comparatively low. In

such situations, it is certainly questionable whether the remuneration paid to the articled

students in reasonably determined and justified.


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5.0 LITERATURE REVIEW

*No literature (journals, articles, etc) was found on this particular study and hence, this study

needs to be conducted independently.


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6.0 METHODOLOGY

This was an exploratory research done to propose a more formal research on the low allowances

paid to CA students in Bangladesh. Initially, data on the allowances paid to articled students in

RRH (KPMG) was collected from the Corporate Affairs manager, Mr. Faruk A. Chowdhury.

Following that, students in 3 other firms were consulted (Acnabin, Quasem & Co., and Abu

Zaman & Co.) to find out about the allowances paid by those firms to its articled students.

Having collected these, data was collected from the official website of ICAB (Institute of

Chartered Accountants of Bangladesh) regarding the minimum allowances set by ICAB that a

CA firm can pay its articled students. Furthermore, information regarding the examination and

registration costs of CA students was also obtained from ICABs website and a comparison was

made in Appendix-1 to show that the allowances paid by CA firms over 3 years do not even

cover for the registration and examination fees of articled students.

The next step was to obtain data regarding the allowances/salaries paid to CA students in other

countries. For this, two graduates working in KPMG Sydneyand Earnest & Young Torontowere

contacted (on a personal basis) to enquire about their salaries. As it turned out, in countries like

Australia and Canada, as like in most other countries, CA students were not referred to as

students but were hired as fresh graduates paying them a decent salary to match the national

average graduate salary and employed full-time with CA support. CA support refers to the factthat the firms hiring these graduates seeking the CA designation were completely sponsored by

the firms in that, their registration and examination fees were all paid by the firm apart from the

salaries paid.

The next step was to investigate whether low student allowances affected students decisions to

come into this profession in Bangladesh. To determine this fact, 15 articled students in RRH

(KPMG) were asked to provide their insights and another 10 accounting students were consulted

from the Dhaka University (given the fact that a majority of the articled students in RRH come

from DU) asking them the same questions. This revealed many facets of this problem and gave

the study a more refined direction.

Lastly, growth figures of RRH (KPMG) were collected from the accounts department of the firm

and compared to the growth figures of student allowances (which have been unchanged for the

last 4 years) to show that despite growth in the profits and revenues of the firm, allowances have

not grown. Having attained all necessary data to propose the study, the problem statement was

outlined and three hypotheses were designed to advance the study in the right direction.


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7.0 CONCLUSION

Chartered Accountancy is one of the most respectable professions in Bangladesh but there are

many gaping holes in the policies set by ICAB that undermine the prospects of this glorious

profession. In a society where we speak of equal employment opportunity, this is a fine example

that debunks this belief.

This problem arises due to the fact that there are a huge number of Chartered Accounting firms

in Bangladesh who are licensed by ICAB to practice the profession. However, most of these

firms neither have sufficient resources nor the expertise to expand their business and grow their

client base. As a result, only a few, top, big-sized firms capture most of the audit market in

Bangladesh with all the large companies and corporations and multi-nationals, leaving the rest of

the CA firms with a few, smaller, local companies to audit. Now, the greater number of the

small-sized CA firms have to fight over the leftovers of the audit market, making the audit fees

chargeable by them very competitive. Veritably, when low audit fees are charged, low

allowances are paid to the students.

When ICAB sets the minimum allowances to be paid by firms to students, they have to keep the

greater, small-sized CA firms in mind who thrive on the smaller audits in the market. The large

CA firms take advantage of the minimum set by ICAB to exploit the students. Thus, ICAB needs

to stop issuing a license to whoever holds a CA designation and should be more austere therequirements to open up a CA firm. Furthermore, when the market will only be characterized by

a few large CA firms, they should set the minimum allowances close the average national

graduate salary to be fairer to the students.


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8.0 APPENDIX

Appendix-1

Costs associated with the CA Profession in Bangladesh

SerialNo.

Description Rate Amount

1. Pr-Examination Coaching Class (for 01session of/ Professional Stage-KnowledgeLevel only)

13,500

2. Cost of Study Manual (PS - KnowledgeLevel) 3,000

3. Cost of Suggested Answer (PS - KnowledgeLevel)

1,600

4. Students Association Fee 500

5. Registration Fee & Administrative Cost 8,900

6. Library Card 2,500

Examination Fees Professional Stage-Knowledge Level

1,300/- persubjectindividually

8,500

Total Expenditure for Knowledge Level 38,500

7. Pre-Examination Coaching Class (for 01session of/ Professional Stage-ApplicationLevel only)

13,500

8. Cost of Study Manual (PS-Application Level) 3,000

9. Cost of Suggested Answer (PS-ApplicationLevel)

1,600


11. Examination Fees Professional Stage-Application Level


18,000

Total Expenditure for Application Level 35,500

12. Pre-Examination Coaching Class (for 01session of/ Advanced Stage-Integration Levelonly)

13,500

13. Cost of Study Manual (PS-Integration Level) 3,000

14. Cost of Suggested Answer (PS-IntegrationLevel)

1,600


16. Examination Fees Advanced Stage-IntegrationLevel


12,000


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Total Expenditure for Integration Level 30,60017. Pre-Examination Coaching Class (for 01

session of/ Advanced Stage-Case Study)13,500

18. Cost of Study Manual (PS-Case Study) 3,000

19. Cost of Suggested Answer (PS-Case Study) 1,600


21. Examination Fees Advanced Stage-CaseStudy

10,000

Total Expenditure for Case Study 27,000

Total Expenditure in 3 years 131,600

Minimum monthly allowances paid by CA firms to articled students as set by ICAB:

Year MonthlyAllowance to

Articled Students

Yearly Allowance

1styear 3,000/- 36,000/-

2n year 3,500/- 42,000/-3r year 4,000/- 48,000/-

Total in 3 years 10,500/- 126,0004t year 4,500/- 54,000/-

Appendix-2

Allowances paid to articled students by RRH (KPMG), Bangladesh

Year Level Passed Monthly Allowance Yearly Allowance1styear None 5,000/- 60,000/-

2n year Professional Stage-Knowledge Level

6,500/-

78,000/-2n year Professional Stage-

Application Level6,500/-

3r year Advance Stage-Integration Level

8,000/- 96,000/-


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Allowances paid to articled students by Acnabin Chartered Accountants, Bangladesh

Year Level Passed Monthly Allowance Yearly Allowance1styear None 6,000/- 72,000/-2n year Professional Stage-

Knowledge Level8,000/-




10,000/- 120,000/-

Allowances paid by Quasem & Co. Chartered Accountants, Bangladesh



6,000/-72,000/-

2n year Professional Stage-Application Level

7,000/- 84,000/-


8,000/- 96,000/-

Allowances paid by Abu Zaman & Co. Chartered Accountants, Bangladesh



4,000/-




5,000/- 60,000/-


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Appendix-3

Salaries paid to employees with CA support in KPMG, Sydney

Year Yearly Allowance inAus. $

Monthly Allowancein Aus. $

Yearly Allowance inTaka

1styear $53,000 $4,417 4,240,000/-

2n year $55,000 $4,583 4,400,000/-

3r year $60,000 $5,000 4,800,000/-

Salaries paid to employees with CA support in Earnest & Young, Toronto

Year Yearly Allowance inAus. $

Monthly Allowancein Aus. $

Yearly Allowance inTaka

1styear $45,000 $3,750 3,600,000/-

2n year $48,000 $4,000 3,840,000/-

3r year $52,000 $4,333 4,160,000/-

Appendix-4

National average graduate salaries of Masters degree holders in Bangladesh

Degree Years of Experience Monthly Salary inTaka

Yearly Salary inTaka

Masters

Starting 35,000 420,000/-

Below 2 years 45,000 540,000/-

2-5 years 60,000 720,000/-

National average graduate salaries of Bachelors degree holders in Bangladesh

Degree Years of Experience Monthly Salary inTaka

Yearly Salary inTaka

Bachelors

Starting 25,000 300,000/-

Below 2 years 30,000 360,000/-

2-5 years 40,000 480,000/-


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9.0 REFERENCES

http://www.kpmg.com/global/en/pages/default.aspx http://www.kpmg.com/bd/en/pages/default.aspx http://www.payscale.com/research/BD/Country=Bangladesh/Salary/by_Degree http://www.acnabin-bd.com/ http://www.icab.org.bd/ http://www.icab.org.bd/index.php?option=com_content&view=article&id=73&Itemid=6

2

http://www.icab.org.bd/index.php?option=com_content&view=article&id=95&Itemid=74

http://www.icab.org.bd/index.php?option=com_content&view=article&id=80&Itemid=91

Accounting Horizons, Vol. 26, No. 2, 2012, pp. 239264 http://dx.doi.org/10.1108/02686901111095029 http://dx.doi.org/10.1108/10309610580000676 http://dx.doi.org/10.1108/09513571111133054

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