Should ICAB conduct a fit-and-proper test for members entering professional practice before issuing a Practice Licence to improve audit quality?

As per membership records, about 203 firms, big and small, partnership or proprietorship, are practicing in Bangladesh. How many of them have affiliations that could not be found? It can be assumed that affiliated firms have to maintain a minimum quality in practice.

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Nowadays, huge questions are being raised from various corners/stakeholders, whether the practicing firms have the required quality in their practice due to the capital market debacle, the banking industry mismanagement, huge NPLs, shortage of good governance in corporate etc. So the question arises, what are the problems in practicing firms, why can they couldn’t reply properly about their duty? Now it becomes the duty of the Institute of Chartered Accountants of Bangladesh to satisfy the stakeholders, but the question is how the ICAB will ensure the quality of audit. They have quality assurance department working on it for a long but the issue could not be settled or minimized.
Now the question is whether the Institute of Chartered Accountants of Bangladesh (ICAB) should implement a “Fit and Proper” test for members entering professional practice, which is a significant topic in the evolution of audit quality.

Currently, ICAB grants a Certificate of Practice (COP) based on membership status (ACA/FCA) and compliance with specific bye-laws, including the completion of prescribed training and payment of fees.

However, many global counterparts like ICAEW, ICAS, and ACCA have shifted toward more rigorous, ongoing assessments of “fitness and propriety” to ensure that auditors possess not just technical knowledge, but also the ethical standing and financial integrity required for public practice.

Current ICAB Framework vs. Proposed Test
Under existing regulations, once a member qualifies as a Chartered Accountant, they are generally eligible for a practice license after fulfilling procedural requirements.

A dedicated “Fit and Proper” test would add a qualitative layer to this process:

Current Practices of ICAB:

Criteria:- Technical Qualification & Membership Duration.

Focus:- Education & Procedural Compliance.

Verification:- Submission of Training Certificate & Fee.

Objective:- Entry into Profession.

If fit and proper test is implemented:

Criteria:- Evaluation of Character, Integrity & Reputation.

Focus:- Ethical Resilience and Professional Conduct.

Verification:- Disclosure of Financial Reliability and Criminal Records.

Objective:- Ensuring Public Trust and Standards.

Potential Benefits for Audit Quality:

Implementing such a test could address several systemic challenges in the auditing landscape:

1. Enhanced Ethical Safeguards: High-quality audits depend on independence and professional skepticism. A fit and proper test identifies individuals with past disciplinary issues or conflicts of interest that might compromise their objectivity.

2. Public Trust: Audit reports are the bedrock of capital markets. Strengthening the licensing process signals to investors and regulators that ICAB practitioners are vetted for their personal and professional integrity.

3. Global Alignment: Leading professional bodies (e.g., under IFAC guidelines) require firms to ensure that all principals and staff are “fit and proper.” Adopting this would align ICAB with international best practices, potentially easing reciprocity agreements.

4. Deterrence of Malpractice: Knowing that one’s license depends on a continuous assessment of character & continuous professional development (CPD) can serve as a deterrent against unethical “opinion shopping” or signing off on substandard audits. CDP should also be measured based on the knowledge gained from CPD, not only hour they attended.

Considerations and Challenges:

While the benefits are clear, implementation requires careful thought:

1. Definition of “Fit”: ICAB would need to clearly define what constitutes “unfit” behavior (e.g., undischarged bankruptcy, civil judgments, or past professional misconduct).

2. Administrative Burden: It would require a robust Oversight Committee to review disclosures and conduct investigations without creating unnecessary red tape for qualified members.

3. Subjectivity: There is a risk of subjective judgment. To avoid this, the criteria must be transparent and backed by a fair appeals process.

Conclusion:
Introducing a “Fit and Proper” test is a proactive step toward Quality Management (ISQM). It shifts the focus from “Can this person audit?” (technical skill) to “Should this person be trusted to audit?” (professional character). Other international bodies should also be compared for this purpose.