The government allocates substantial funding to the country’s public universities every year. A significant portion of the operational and development activities of these higher education institutions is financed through these state grants. But public universities have major structural deficiencies in transparency, accountability, and governance of financial accounts. None of the country’s public universities prepares a complete set of financial statements (balance sheet), in accordance with internationally recognised accounting standards. The actual picture of their total assets, long-term liabilities, capital, and overall financial position remains obscured.
The Financial Reporting Council (FRC) have recently highlighted the long-standing structural weaknesses and lack of accountability in the financial management of public universities. None of the country’s public universities prepares comprehensive financial statements in compliance with internationally accepted accounting standards, according to the council’s observations. Most universities produce only basic income and expenditure statements, which fail to provide a complete picture of their financial position. Consequently, there is no clear information regarding the institutions’ total assets, liabilities, capital, or long-term financial obligations. Stakeholders say this is not merely a limitation of the accounting system; it also represents a significant gap in ensuring effective accountability for the use of public funds in the higher education sector.
On September 10 last year, the FRC wrote to the then adviser to the finance ministry, informing him that it had begun monitoring the financial reporting of various public interest entities to ensure greater transparency and accountability. As part of this initiative, on July 27 last year, the University Grants Commission (UGC) instructed all universities in the country to submit their most recent audited financial statements. In response to the directive, 70 universities submitted their financial reports, including 49 private universities and 21 public universities. The remaining public universities did not submit any financial statements within the stipulated deadline.
The FRC’s review found that while private universities submitted complete financial statements audited by independent external auditors, the public universities submitted documents that were largely incomplete, unaudited, and partial. In most cases, they consisted only of income and expenditure statements prepared for internal use. Under international accounting standards, however, a complete set of financial statements must include a balance sheet, an income statement, a cash flow statement, and notes to the accounts. In the absence of these components, it is impossible to obtain a reliable picture of universities’ land holdings, buildings, research infrastructure, fixed assets, liabilities, or future financial risks.
Financial discipline and accountability cannot be ensured solely through internal audits without complete financial statements. To strengthen financial governance, it is essential to appoint independent external auditors and conduct external audits, the FRC’s letter further noted.
Higher education institutions receive billions of taka in annual allocations from the state treasury, according to financial analysts. So to maintain sound financial discipline, UGC and FRC should jointly ensure that public universities prepare balance sheets in line with international guidelines and undergo external audits conducted by professional chartered accountancy firms. Good governance and accountability in the country’s higher education sector will otherwise remain inadequate.
Commenting on the issue, FRC Chairman Dr Md Sajjad Hossain Bhuiyan told Bonik Barta, “Financial statements are essential to know the accumulated assets and liabilities of public universities. Without proper financial statements, it is impossible to ascertain the status of their accumulated assets and liabilities.”
An analysis of the legal frameworks governing public universities shows that there is no uniform provision for auditing their accounts. Only 10 public universities have legal provisions requiring the appointment of chartered accountants to audit their financial statements. These are Jagannath University, Jatiya Kabi Kazi Nazrul Islam University, Comilla University, Begum Rokeya University, University of Barishal, Bangladesh Medical University, Gazipur Agricultural University, Rabindra University, Khulna Agricultural University, and Sylhet Medical University.
Among the remaining institutions, the University of Dhaka does not explicitly specify any authority responsible for conducting audits. The officer responsible for preparing and submitting the university’s financial accounts and inventory returns must verify their completeness and accuracy and ensure that they are submitted to the appropriate authority within the prescribed timeframe, according to the University of Dhaka Financial Regulations 2006.
Professor Dr M Jahangir Alam Chowdhury, treasurer, University of Dhaka, told Bonik Barta, “This has been the practice for a long time. We’ve not yet reached the stage where financial statements are prepared in accordance with formal accounting standards and regulations. But our Director of Finance would be better placed to respond to this matter. We don’t engage external auditors to audit the university. Government institutions don’t appoint outside auditors. The relevant authorities conduct the audits. After all, this isn’t a private organisation.”
The Rajshahi University Act and the Jahangirnagar University Act stipulate that, under the direction of the university syndicate, annual financial statements and balance sheets must be prepared and submitted to the UGC for audit. The University of Chittagong Act similarly requires the university syndicate to prepare annual financial statements and balance sheets and have them audited by a UGC-designated authority.
Rajshahi University Treasurer Professor Md Matiar Rahman told Bonik Barta, “Rajshahi University has submitted all the required financial statements. There may be one or two audit observations in certain areas. But if the statements hadn’t been submitted, there would have been no question of audit observations in the first place. So these statements must be submitted in accordance with the prescribed rules. Government-appointed external auditors also audited them. Only a few days ago, a three- to four-member delegation from RUET worked on this matter.”
Most universities require their accounts to be audited by a UGC-nominated authority, according to an analysis of the legal frameworks governing public universities. But a review of UGC reports indicates that universities often fail to submit their annual income and expenditure statements to the Commission on time. The UGC’s latest annual report states that it had to issue multiple reminder letters to universities before receiving the information necessary to prepare its comprehensive annual report.
According to the UGC-published latest annual report, which contains financial data for the FY 2022–23, the combined revenue earned by Bangladesh’s 53 public universities amounted to around BDT 13.08 billion, while government grants totalled BDT 49.94 billion. The universities’ combined budget for the fiscal year stood at BDT 63.03 billion, against which total expenditure reached around BDT 61.73 billion.
Public universities in Bangladesh are audited by the Directorate of Education Audit, which operates under the Office of the Comptroller and Auditor General (CAG), according to the UGC. The UGC’s Audit and Accounts Department also audits the expenditure of funds allocated to universities. As of December 2023, public universities had accumulated 506 audit objections involving BDT 14.21 billion, according to the UGC’s latest annual report.
Md Kamrul Alam, director general of the Directorate of Education Audit, told Bonik Barta, “There’s no disagreement that public universities should prepare proper financial statements. But the legal provisions governing audits vary from one university to another. Some university acts require audits to be conducted by the CAG. Others require audits by chartered accountants. In some cases, the law stipulates that chartered accountants should be appointed through the CAG. So there’s no legal scope to conduct audits beyond the respective laws.”
Meanwhile, public universities have long faced allegations of financial irregularities, including irregularities in recruitment. The Anti-Corruption Commission (ACC) has also filed cases over such allegations at several universities. An analysis of publicly available information from leading global universities, including Harvard University and Peking University in China, shows that most top-ranked institutions publicly disclose their audit reports to ensure transparency and accountability. Education experts say that universities in Bangladesh should likewise ensure the preparation of proper financial statements and independent audits to strengthen transparency and accountability.
Former Finance Secretary and Comptroller and Auditor General (CAG) Mohammad Muslim Chowdhury told Bonik Barta, “The audit framework for public universities isn’t uniform due to historical and legal reasons. When the older universities — such as the University of Dhaka, the University of Chittagong, the University of Rajshahi, and Jahangirnagar University — were established, responsibility for their audits was primarily entrusted to the CAG. Later, in some cases of newly established universities, provisions were introduced requiring their financial statements to be audited by chartered accountants. In India, university audit reports are submitted to Parliament, where they are scrutinised through the Public Accounts Committee. But this remains a weak area in Bangladesh.”
Referring to the fact that many public universities in Bangladesh do not prepare complete financial statements, the former CAG further said, “Many institutions limit themselves to preparing simple income and expenditure statements, despite receiving billions of taka in government grants and project funding. The grants these universities receive from the government are financed by taxpayers’ money. So there should be a unified legal framework for auditing public universities — one that ensures transparency, adherence to professional standards, and accountability. If necessary, financial statement audits may be conducted by chartered accountants under the CAG supervision. A panel of qualified chartered accountants could also be prepared for this purpose. It should also be defined who will receive the audit reports, how accountability will be ensured, and to what extent the audit process will remain independent.”