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    Country by Country Financial Reporting and Auditing Framework

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    Sri Lanka – Gajma & Co. (prepared January 2015)

    Preparation and Filing of Statutory Financial Statements

    Companies other than Private companies are required to submit the financial statements for Registration to the Department of Registrar of Companies. Specified Business Enterprises (SBEs) are also required to submit the financial statements to the Sri Lanka Accounting & Auditing Standards Monitoring Board (SLAASMB). These include all quoted companies, companies carrying on business which are important for the purpose of monitoring (such as banking, finance, insurance, and leasing), other large companies (Public and Private), and Public Corporations.

     

    Financial Reporting Framework

    Accounting standards are issued by the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) which are called Sri Lanka Financial Reporting Standards (SLFRS). SLFRSs are substantially compliant with International Financial Reporting Standards (IFRS) subject to a few instances where alternative treatments are allowed.

    According to Sri Lanka Accounting and Auditing Standards Act, Specified Business Enterprises (SBEs) listed below are required to comply with SLFRSs:

    • Listed Entities
    • Companies licensed under banking Act
    • Companies carrying on leasing business
    • Unit Trust
    • Stockbrokers and stock dealers
    • Factoring Companies
    • Fund Management Companies
    • Insurance and Finance Companies
    • Other companies which have turnover in excess of SLR 500 Million
    • Other companies which have shareholders equity in excess of SLR 100 Million
    • Other companies which have gross assets in excess of SLR 300 Million
    • Other companies which have liabilities to banks and financial institutions in excess of SLR 100 Million
    • Staff in excess of 1000 employees.

    To allow specific requirements for Small & Medium Enterprises (SMEs), SLFRSs for SMEs is permitted which is substantially compliant with IFRS for SMEs.

     

    Generally, companies' financial statements are prepared as at 31st March as at their year end. However, Companies can adopt such other date as their year end.

     

    Audit Requirements for Companies Registered in Sri Lanka

    According to Companies Act, all Companies are required to prepare annual financial statements and are required to have them audited. The accounts of specified business enterprises shall be audited by professionally qualified auditors who must be the members of CA Sri Lanka, holding a certificate to practice.

     

    Audit Appointment, Rotation and Joint Audits

    The Auditor shall be appointed by the Shareholders of Companies. However, in specific circumstances, the auditor may be appointed by the Board of Directors or by the Company Registrar and shall be removed or reappointed at the Annual General meeting.

    Listed companies shall rotate their engagement partners every seven years according to the code of ethics issued by CA Sri Lanka. Auditors are appointed by the members of a company at the company's Annual General Meeting.

     

    Auditing Standards

    All Auditing standards are issued by CA Sri Lanka are fully complied with International Standards on Auditing issued by IAASB.

     

    Ethical Framework

    CA Sri Lanka's Code of Ethics provides the guidance for Professional accountants in public practice & Professional accountants in Business which is fully compliant with Code of Ethics for Professional Accountants published by IFAC.

     

    Audit Regulation

     

    External Monitoring

    As mentioned above, Specified Business Enterprises are required to submit the annual financial statements to the Sri Lanka Accounting & Auditing Standards Monitoring Board (SLAASMB), to enable the Board to determine whether the financial statements have been prepared in compliance with Sri Lanka Accounting Standards and audited in accordance with the Sri Lanka Auditing Standards.

     

    Internal Monitoring

    According to Sri Lanka Standard on Quality Control (SLSQC1), Gajma & Co have established a formal annual monitoring and a peer review process which allows us to gain assurance that our firm's quality control systems are operating effectively. The review consists of both reviews of individual files and an assessment of compliance with the firm's policies and procedures relating to independence and audit quality.


    Contact Us
    David Chitty - Audit
    London, United Kingdom
    +44 20.7842.7292


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