With Sri Lanka’s convergence to International Financial Reporting Standards (IFRS), renowned Australian financial reporting expert Ms. Dianne Azoor-Hughes, who was in Sri Lanka recently, has stressed for a more proactive role to be played by the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka), which is the country’s sole authority in formulating Accounting and Auditing Standards.
Ms. Azoor-Hughes who commands over twenty-five years’ experience in financial reporting, including audit, academia, technical and standard setting also serves as the Technical Standards Partner / Executive Director for financial reporting at Baker Tilly Pitcher Partners Melbourne and was also the guest speaker at a seminar titled ‘The future of audit and financial reporting’ organized by CA Sri Lanka.
In a Question and Answer session, Ms. Azoor-Hughes noted that the real challenge was to put theory into practice and adviced the Institute to actively participate in and monitor proposals as soon as they are introduced rather than waiting until they reach exposure draft stage.
Question: How would you define the future of audit and accounting on a Sri Lankan context?
Answer: All jurisdictions are experiencing increased emphasis on international standards for financial reporting, audit and ethics. Sri Lanka has already adopted international standards and therefore I expect it will continue to be aligned with international best practice.
Question: When it comes to transparency, accountability, how can Sri Lanka be rated with regard to adhering to the strictest financial reporting standards?
Answer: This depends on the findings of the Sri Lanka regulatory oversight – the frameworks appear to be in place and therefore the results of monitoring activity will demonstrate how effectively they are adopted in practice.
Question: At a time when transparency and accountability lacks in society, what are the biggest obstacles in ensuring that the accounting and auditing are followed to the strictest rule?
Answer: Attitudes towards ethical behavior must be of the highest professional standard in all aspects of business and business regulation. Ethical behavior should be expected, demanded and delivered.
Question: What can a developing nation such as Sri Lanka do to ensure that we adhere to these standards in the strictest form?
Answer: The independence and funding of regulatory oversight should be sufficient to ensure that monitoring activity is driven by appropriate motives, being those to continually improve the quality of financial reporting. If the appropriate accounting framework is required to be followed and enforced through appropriate regulatory oversight, then corporate transparency and accountability will follow as a consequence.
Question: What are your thoughts on Sri Lanka’s convergence to the International Financial Reporting Standards this year?
Answer: I do not have any personal knowledge of how the convergence process operated in Sri Lanka, or to what extent the exact requirements IFRS have been adopted in Sri Lanka. However, the context for financial reporting under IFRS is economic performance rather than historical cost perfo