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86 CA Sri Lanka Integrated Annual Report 2024

Cutting Edge Global Standards

Adopting Global Accounting & Auditing E Sri Lanka Auditing & Assurance
Standards
Standards In adopting the Sri Lanka Auditing & Assurance
Standards, the Auditing Standards Committee
is guided by the Standards issued by the
Standard Setting International Auditing and Assurance Standards
CA Sri Lanka, as the sole authority in the country for the adoption of Board (IAASB) of the International Federation of
Accounting and Auditing Standards, continues to develop and implement Accountants (IFAC).
Sri Lanka Accounting and Auditing Standards under the purview of
Sri Lanka Accounting and Sri Lanka Auditing Standards Committees. These Strategic Interventions in Financial Reporting
committees operate under the provisions of the Sri Lanka Accounting and The Institute provided expert guidance on
Auditing Standards Act No. 15 of 1995 (the Act), providing the establishment complex financial matters of government
of Accounting and Auditing Standards Committees to assist the Council of CA and other commercial entities directed to the
Sri Lanka in the promulgation of these standards.
Financial Reporting Standards and Interpretation
Committee.
All standards developed by these two committees are approved by the CA
Sri Lanka Council prior to being formally gazetted in all three languages.
Debt Restructuring and Financial Guidance
CA Sri Lanka provided actionable guidance
To increase the adoption of standards and user convenience, the Institute has on sovereign bonds and complex financial
established a dedicated website for the two committees providing technical instruments during economic volatility.
announcements and developments on the related Accounting and Auditing
& Assurance Standards. The website (www.slaasc.lk) provides increased In July 2024, Restructure of International Sovereign
visibility for all communications issued by the two committees, including Bonds (ISB’s) Task Force provided guidance to
access to digital copies of the respective gazettes.
the financial services sector through the Sri Lanka
Bankers’ Association (SLBA) on the potential
The Technical Division of CA Sri Lanka plays a significant role in upholding restructure of the ISB’s. At the inception of the
consistency and high standards in the preparation of and presentation of the default, the Task Force had limited information to
financial statements of business enterprises.
determine the provisioning requirements relating
to ISB restructuring. However, based on available
E Sri Lanka Accounting Standards information on Debt Sustainability targets provided
Currently, there are 03 frameworks of Accounting Standards applicable to by the IMF, the Task Force worked backwards on
entities operating in Sri Lanka.
the potential impact of a possible restructuring. The
Task Force proposed guidelines to the financial
Sri Lanka Financial Reporting Standards ( LKAS/SLFRS) services sector on the requirements to develop
Mandatory for Specified Business Enterprises (SBEs) as per the Sri Lanka Accounting possible provisions relating to Day 1 Losses and
and Auditing Act No.15 of 1995 (SLAASMB Act) except for the SBEs as prescribed by Expected Credit Loss requirements. Once the
Gazette Extraordinary No. 1074/7 dated 7th April 1999 which are permitted to follow terms of the restructuring reached consensus
SLFRS for SMEs as well.
between the parties, the Task Force evaluated the
recoverability of the instrument at the Baseline
SLFRS for SMES scenario under simulated exit yields. It was
Applicable for entities which do not have public accountability and publish general- construed that the existing provision maintained
purpose financial statements for external users. SLFRS for SMEs issued in 2015 are by the financial institutions was adequate to cover
effective from 01st January 2016.
potential losses resulting from the restructuring
agreement. Our timely recommendation to the
Sri Lanka Accounting Standard for Smaller Entities market helped financial assets to have appropriate
Provides a further simple financial reporting standard which could be cost-effectively value and the advice provided for ISBs provisioning
used by Smaller Entities. The requirements stated in SLFRS for Smaller Entities has been adequate and proved the accuracy of
recognise the size, level of complexity, availability of resources and their effect on judgments made by the panel.
cost-effectiveness in the preparation and presentation of financial statements of
smaller entities.
Publication
E CA Sri Lanka's Contributions to the
Government's Debt Restructuring
Programme - 2022-2024 (October 2024)