ROSC 2015 Sri Lanka Report On Observance Of Standards And Codes Accounting & Auditing.
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Transcript ROSC 2015 Sri Lanka Report On Observance Of Standards And Codes Accounting & Auditing.
ROSC 2015
Sri Lanka Report On Observance Of
Standards And Codes
Accounting & Auditing
Outline…….
Reminder – objective, approach
Reforms since 2004
Review key findings and policy
recommendations
Reminder of approach….diagnostic to capacity building
Emerging issues
2004 Policy recommendations
Statutory
Framework
Education &
Training
Accountancy
Profession & Ethics
WHY
Reforms to strengthen –
systemic issues
Accounting
Standards
Auditing Standards
Monitoring,
Enforcement &
Oversight
Diagnostic questionnaire and due
diligence (stakeholders engagement)
Stakeholder Consultations
• Auditor General
• CASL – main partner
• DG MOF (SOE)
• PFM Steering Committee
• Chamber of Commerce
• Preparers of financial
statements
• SME and Financial Institutions
• Statutory Auditing Standards
Committee & Accounting
Standards Committee
• All PAOs
• Learning providers
• Auditor roundtables (large and
SMPs separately)
• Ministry of Finance
• All regulators (separate
meetings), Registrar of
Companies, Department of
Inland Revenue
• DG’s and staff of State
Accounts, Public Finance,
Public Enterprises
Thank you!
5
Steps…..
Dissemination
workshop – all
stakeholders
Conducted review
Dec 2013 – Sep 2014
Design reform
action plan
Dissemination
workshops
- Focused session
Implementation,
monitoring and
evaluation the
action plan
Reforms since 2004
Investment climate
Adoption of international financial
reporting and auditing standards
Introduction of audit quality
assurance
PAOs support to preparers and
auditors
Issuance of updated Corporate
Governance Code
Increased capacity and efficacy of
regulators - SLAASMB
Structural shifts in the economy and social inclusion
Increased number of professional
accountants and students - by PAOs
Professional accountancy
qualifications aligned with
international education standards
Growth of BPO sector in finance and
accounting
Professional accountants hold
influential positions nationally and
globally
Strengthening the public sector
• Public sector
standards
• Association of public
Finance Accountants
• SOEs follow IFRS
Key findings and principle based
policy recommendations
Status of implementing 2004 recommendations
Status
Specifics
1
7/14 fully
implemented
• Mandated use of IFRS without modification.
• Issued guidance to ensure uniform application of IFRS
Strengthened enforcement mechanism
• Strengthened capacity of SLAASMB and other regulators
• Required separate disclosure of audit and non-audit service fee
2
5/14 partially
implemented
(under
implementation)
• Ensure better co-ordination among regulators
• Upgrade the licensing procedures for accountants and auditors
in public practice.
• Improve the professional education and training arrangements
of the Institute of Chartered Accountants of Sri Lanka
13
Strengthen audit
practices
Registered auditors
• Companies Act S 157– audits by CA SL
and registered auditors (for private Co)
• 1964 Regulation – who can be RA –
individual and PAOs
• RAs 569. RA Firms 42 – not monitored
Recommendation
• Amend Companies Act – audits to be
done by qualified auditors,.
• RAs to comply with SL auditing
standards, code of ethics and regulated
Strengthen audit
practices
Registration and renewal of auditors
• CASL Act of incorporation: require
registration of practicing audit
firms
• CASL by –laws: require renewal of
audit licenses supported by
annual returns
• CASL policy for readmitting
auditors who have been out of
public practice for more than 3 yrs
Strengthen audit
practices
Small and Medium Practitioners
• 441 of 526 registered CA auditors, are
sole practitioners.
• Challenge: compliance with ISQC1,
remain up to date with technical
developments, compete in the
market
Recommendation
• CASL initiate and facilitate a voluntary
merger program for sole practitioners
• Empower SMPs to offer alternative
services
Strengthen PAOs
Education & Training - qualifications
• Expand National Quality Framework to
include professional accounting
qualifications
• Implement structured framework for
accrediting and monitoring learning
providers and employers
• Monitor CPD and sanction noncompliance
• Reduce disparity in service between
Western Province and other provinces
Strengthen PAOs
Ethics
• Align code of ethics to latest IESBA Code
• Disclose (on websites) the disciplinary
procedures, reports of disciplinary orders
and regulatory decisions
To support implementation of standards
• Guidelines, case study training, help desks
• Customized training for key stakeholder
grouping
• Establish a formal arrangement for SME,
SMPs, PAOs and chamber of commerce to
work together to enhance the capacity of
SMEs
Strengthen financial
reporting - accounting
Statutory Framework – companies Act
•Differential reporting
•Define categories of companies
•Prescribe the accounting,
auditing, and review
requirement for each category
•Registrar of companies
•Require companies to file annual
returns – with comprehensive
information
Strengthen financial
reporting
Accounting & Auditing Standards
• Revisit representation of professional
accounting organizations in standardsetting – include all key stakeholders
• Increase influence at
standards setting level
international
• Enhance research capacity
• Establish industry specifics work groups to
engage on respective industry issues
Strengthen
monitoring
Monitoring, Compliance & Enforcement
• Enhance methodologies, capacity
and information sharing processes
in all regulators
• Enhance SLAASMB reviews to
adopt more risk based methods
and use of IT
• CASL - Implement a mandatory
audit quality assurance review
process for audit firms to fully
implement SLSQC 1
Design reform action
plan …
Thank You