Institute of Chartered Accountants of Sri Lanka

While the Sri Lanka Accounting and Auditing Standards Monitoring Board is charged with monitoring compliance with applicable auditing standards, CA Sri Lanka is responsible for implementation of a QA system in the country in accordance with the Sri Lanka Accounting and Auditing Standards Act No.15 (1995).

In 2009, CA Sri Lanka established an Audit Quality Assurance Board (QAB), which is responsible for overseeing the QA functions of the institute. The QAB is independent of the CA Sri Lanka Council and is represented by all key regulators in the country. With support from the World Bank and the Institute of Chartered Accountants in England and Wales, the institute launched its voluntary Audit Quality Assurance (AQA) Program in 2013. CA Sri Lanka conducted an assessment of its QA system against the requirements of SMO 1 and identified that because the system is voluntary, it has not adopted a review cycle for the reviews. The institute reports that the Sri Lanka Accounting and Auditing Standards Act is being amended and provisions for QA reviews may be added and be further defined although the timeline for this is not confirmed.

The institute developed the Sri Lanka Standard on Quality Control 1 (SLSQC 1) Toolkit to assist members to understand and apply the quality control standards. Additionally, CA Sri Lanka has conducted a number of SLSQC 1 workshops/interactive sessions during which practicing firms are guided through a comprehensive learning process. CA Sri Lanka has also produced a brochure on the AQA to familiarize practicing members and firms with SLSQC 1 policies and procedures.

According to the online version of CA Sri Lanka’s Audit Quality Assurance Program, since 2009 at least 40 reviews of firms have taken place on a voluntary basis.

In the next update of its SMO Action Plan, CA Sri Lanka is encouraged to provide updates on a timeline and efforts to amend the Accounting and Auditing Standards Act to bring its QA review system in line with the SMO 1 requirements.

Current Status: Review & Improve

CA Sri Lanka shares responsibility in the jurisdiction for setting initial professional development (IPD) and continuing professional development (CPD) requirements for professional accountants. The institute reports that since 2010, its IPD and CPD program is considered rigorous and incorporates the revised 2015 IES.

CA Sri Lanka reports that it has implemented a comprehensive program for CPD as recommended in the 2015 World Bank Report on the Observance of Standards and Codes. In addition, CA Sri Lanka states it has adopted IES 8 and the institute has introduced mandatory relevant CPD hours for practicing members and rolling CPD requirement applicable for all members. Furthermore, CA Sri Lanka evaluates and monitors the compliance of CPD requirements by its members, and seeks members input and feedback on CPD topics that are offered.

The institute indicates that after revising its CPD program in 2016, it offers a range of support to members such as learning events and dissemination of pertinent information and updates. A new development in this area has been the institute’s launch of a CPD Online Academy that provides members with remote access to e-programs to enhance their knowledge while obtaining CPD. The institute also offers training to lecturers, practical training providers, and examiners to ensure that they are aware of the revised requirements.

CA Sri Lanka indicates that it ensures that ethics and other technical standard-related topics, including updates, are incorporated into education and training programs. In addition to standard-related topics, CA Sri Lanka also offers sessions and resources on business skills development for its members. To benefit small and medium-sized practices, CA Sri Lanka has organized a series of workshops designed for SMPs, including hosting seminars that specifically cover the Sri Lanka Accounting Standards for SMEs. The institute reports that it participates in the international standard-setting process by reviewing and responding to exposure drafts and other consultative papers issued by the IAESB.

Current Status: Sustain

Under the Sri Lanka Accounting and Auditing Standards Act No. 15 (1995), CA Sri Lanka is responsible for both the adoption and implementation of ISA and other standards issued by the IAASB. As of December 2017, CA Sri Lanka has adopted the 2016 version of the ISA as Sri Lanka Auditing Standards (SLAuS) with modifications due to national requirements.

The institute’s Auditing Standards Committee regularly reviews IAASB pronouncements to ensure that revisions are incorporated into the SLAuS. The Committee also reviews and responds to exposure drafts and other consultative papers issued by the IAASB. Revisions and updates to auditing standards also take into consideration public consultations with key stakeholders.

The SLAuS are made available on the Auditing Standards Committee website, and in the form of hardcopies to raise awareness and support implementation of the standards. Additionally, the institute provides technical support via online inquiries, circulars, and education programs.

CA Sri Lanka is encouraged to continue its efforts to adopt the ISA as issued by the IAASB with minimal and acceptable modifications.

Current Status: Review & Improve

CA Sri Lanka is responsible for setting ethical requirements for its members and the institute reports it has adopted the 2016 IESBA Code of Ethics.

CA Sri Lanka has conducted an awareness-raising session on the revised provisions of the new Code of Ethics for its members and has incorporated ethics into its curriculum.

CA Sri Lanka reports that it participates in the international standard-setting process by reviewing and responding to exposure drafts issued by IESBA.

Current Status: Sustain

In 2015, the Sri Lanka Accounting and Auditing Standards Act No. 15 of 1995 was revised and the new amendments empowered CA Sri Lanka to issue public sector accounting standards in partnership with the Ministry of Finance and Planning. Since 2011, CA Sri Lanka has been issuing Sri Lankan Public Sector Accounting Standards (SLPSAS) as the standards to be applied by all non-commercial public corporations, state-owned enterprises, Ministries, Departments, and Local Authorities. The institute issues SLPSAS jointly with the Ministry of Finance, via its Public-Sector Accounting Standards Committee (PSASC), and assists with the translation of SLPSAS approved by PSASC into Sinhala and Tamil.

Since 2016, 20 IPSAS have been adopted as SLPSAS. Minor modifications have been made to IPSAS, including changing the name to SLPSAS and deleting paragraphs not applicable to Sri Lanka; however, no material modifications were made. The institute has also developed a simplified version of the standards for local authorities.

In February 2015, in collaboration with the Chartered Institute of Public Finance and Accountancy (CIPFA), CA Sri Lanka launched a new professional qualification “Chartered Public Finance Accountancy (CPFA)” for public sector accountants, auditors, and assessors. The qualification was developed in line with CIPFA’s International Public Financial Management qualification. CA Sri Lanka reports that it has formed the Association of Public Finance Accountants of Sri Lanka as the public-sector entity within CA Sri Lanka to enhance the qualifications, education, and training of the public-sector officers dealing with financial management related activities. A continuing professional development scheme has been formulated and introduced to CPFA members at an orientation program held in November 2017. In addition, there are stated plans to sign a Memorandum of Understanding with CIPFA to enable members of CA Sri Lanka to become members of CIPFA subject to their academic qualifications and levels of experience.

To further support the implementation of the SLPSAS, CA Sri Lanka runs training programs on the standards.

CA Sri Lanka is encouraged to develop a timeline related to actions to adopt the full suite of IPSAS in Sri Lanka and may consider additional actions with the MFP regarding this initiative. CA Sri Lanka is encouraged to continue disseminating updates to its members on revisions and updates to standards and other pronouncements issued by IPSASB.

Current Status: Execute

CA Sri Lanka is responsible for establishing an I&D mechanism for its members. The institute reports that its system is operational and incorporates all the requirements of SMO 6.

When a complaint is received, CA Sri Lanka’s Professional Conduct (Ethics) Committee reviews the case and if necessary, the complainant and accused are interviewed by the Committee. If disciplinary action is to be taken, the disciplinary committee reviews the investigation before recommending sanctions to the Council of CA Sri Lanka for confirmation.

During 2017, CA Sri Lanka reviewed 13 cases of which seven were upheld, and six are pending.

The institute raises awareness of the I&D system among its members through the publication of I&D procedures on its website and distribution of the Act of Incorporation among members.

In the next update of its SMO Action Plan, CA Sri Lanka is encouraged to consider elaborating on its collaborative efforts with the Sri Lanka Accounting and Auditing Standards Monitoring Board on I&D matters and how this collaboration works in the interest of the public.

Current Status: Review & Improve

Under the Accounting and Auditing Standards Act No.15 of 1995, CA Sri Lanka is responsible for adopting accounting standards in Sri Lanka and has adopted the 2017 International Financial Reporting Standards (IFRS) Consolidated without Early Adoption version as the Sri Lankan Financial Reporting Standards (SLFRS). SLFRS for Small- and Medium-sized Entities (SMEs), which is based on IFRS for SMEs, has also been adopted.

CA Sri Lanka promotes the adoption and implementation of SLFRS through several activities such as: the establishment of ongoing processes to converge the standards within the local context; translation of all accounting standards into Sinhala and Tamil; communication of revised standards to members of CA Sri Lanka, regulatory authorities, academia and other interested parties; publication of IASB discussion papers and exposure drafts with guidance on how to submit contributions on CA Sri Lanka’s website; and hosting roundtable discussions on the exposure drafts.

Furthermore, CA Sri Lanka established the Financial Reporting Standards Implementation and Interpretation Committee to assist preparers of financial statements on the SLFRS and common application issues. The institute also delivers an Annual Accounting Standards Seminar Series and other workshops to raise awareness and educate members on new developments. CA Sri Lanka reports that with the assistance of World Bank funding, an SLFRS e-learning module has been made available for its members. The institute also raises awareness of IFRS for SMEs through regional training programs.

CA Sri Lanka is encouraged to continue its efforts to eliminate material differences between SLFRS and IFRS.

Current Status: Sustain