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