2014 Sri Lanka ROSC A&AMeeting With Development Partners

January 29, 2014

Objective

• Supporting Sri Lanka’s growth by – improving the investment climate (ROSC & )

• Strengthening private sector transparency and accountability

• Strengthening regulators

– strengthening the public sector– Supporting structural shifts in the economy

and social inclusion

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World Bank Support

Strengthening Corporate Reporting

ROSC 2014

IFRS Roll Out

SMP Training

Audit Quality Assurance

Strengthening the Public Sector

PEFA Assessment

Public Sector Accounting Standards (IPSAS)

Professionalising Public Sector Accountants

Support to Auditor General

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Outline….

About the ROSC A&A Programme

Sri Lanka ROSC

Accounting & Auditing Profession

Way Forward

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Monitoring, Enforcement & Oversight

Auditing Standards

Accounting Standards

Accountancy Profession &

Ethics

Education & Training

StatutoryFramework

Reminder of approach.diagnostic to capacity building

Emerging issues2004 Policy recommendations

Reforms to strengthen – systemic issues

WH

Y

Diagnostic questionnaire and due diligence

Twelve Standards and Codes – financial stability

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Macroeconomic policy and data transparency

1. Data Transparency2. Fiscal Transparency3. Monetary and Financial Policy TransparencyFinancial Sector Regulation & Supervision 4. Banking Supervision5. Securities Regulation6. Insurance Supervision 7. Payments Systems8. Anti-money laundering

Market Integrity – institutional and market infrastructure 9. Accounting10. Auditing11. Corporate Governance12. Insolvency and Creditor Rights

Bank-Fund Joint Initiative on Standards & Codes

Identify priority areas in A&AInstitutional Framework

underpinning Corporate Reporting

• Laws and regulations for SBEs/SOEs/SMEs, • SMO for PAOs, • Codes, • Standard setting processes, • monitoring mechanisms,• accounting education

Comparison of Accounting &

Auditing Standards

• Benchmarking with IFRS and ISA

Actual Reporting & Auditing Practices

• Independent review of a sample covering listed companies, SOEs and other SBEs including Banks and insurance cos,

• review regulators processes and results

Stakeholder needs and perceptions

on quality of corporate reporting

• Capital market development• Access to finance for SMEs• Oversight of SOEs that are SBEs

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8

Global

IASB(Financial Reporting Standard

Setter)

Sri Lanka

SLAASMB

Profession

CASL Standard Setter for A&A

120,000 students13,000 members

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•Key to development of capital markets•SLFRS now compatible with IFRS BV 2013•SLAS are compatible with ISA 2009•Obligation to facilitate adoption of global standards

Promulgate Accounting &

Auditing Standards

•Has a portfolio of qualifications including the CA qualification•Key player in tertiary education recruiting approx 8000 students annually. Approx 40,000 registered students.

•Effective inclusion of provinces and minimise disparities•Monitor training and adapt to changing employer requirements

Provide Accounting

Qualifications

•Compliance with IFAC SMOs Issues practising certificates for auditors•CPD•Audit quality assurance (SLSQC 1)•Code of Ethics

Set Standards for Members

•Currently holds Presidency of CAPA and SAFA•Influence global standards setting process•Influence regional adoption of global standards

Global Integration of the

Profession

Regulatory MilestonesROSC 2004

Companies Act No 7 of 2007

RII Act No,23 of 2011

Amendments to Banking Act and issue of directions

Finance Business Act No 42 of 2012

Convergence to SLFRS 2012

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Key Milestones

•Currently complies with BV 2013•Issues with valuations•New skills required to implement and monitor consistent implementation of SLFRS •Dual Reporting – CBSL & Inland Revenue •Challenges with SMEs

Convergence with IFRS

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Key Milestones

•Currently complies with 2009 ISAs•Audit quality assurance•Registered Auditors•Challenges with SMPs

Audit

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Key Milestones

•Employs over 60,000 Sri Lankans in 300 + companies•US$ 471 mn in 2013•FAO is 1/5 Cetrnes of Excellence•Broad spectrum of work with a growing emphasis on high end work•Talent pool of 120,000 + accounting students is a key attraction•25% of A/L students do commerce and this is expected to increase to 35%

BPO Sector

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•CBSL (Bank and NBFI), IBSL, SEC and CSE have all increased capacity and increased regulation.•Changing needs as goal posts shift

Regulators

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Key Milestones

•Contributes to the growth of a knowledge hub•Growth of profession is mainly Colombo centric•Qualification framework is not in place•Standard setting process needs to recognise new professional bodies

Growth of the Profession

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2004 ROSC Recommendations• Mandate use of IFRS

without modification• Issue guidance for

uniform application of IFRS

• Strengthen enforcement mechanisms

• Strengthen capacity of regulators

• Wider public availability and enforcement

• Disclosure of non-audit fees

Implemented

• Co-ordination amongst regulators

• Upgrade licensing procedures for accountants/auditors in public practice

• Strengthen CASL capacity

• Improve professional education/training at CASL

• Improve academic accounting curriculum and teaching

• Mandatory CPE

Partially Implemented

• Legal reforms for independent oversight of auditing profession by SLAASMB

• Introduce an awareness program for improving the degree of compliance with accounting requirements by specified business enterprises.

Not Implemented

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6/14

2/14

6/14

Strengthening CASL

Enhance Public Sector Financial

Management

Capital Markets

Development

Provincial Development &

Effective Inclusion

Institutional Capacity Building

• Promote country’s economic growth through capital markets development, public sectors financial management, and a skilled work force

• Provincial development and effective social inclusion• Modernise to meet employer requirements• Effective and efficient performance

Public Sector Proposals

Improve knowledge of IPSAS

within Public Sector

Assess and benchmark

knowledge and application of

IPSAS

CASL/CIPFA Joint Qualificatio

n

Provide resources for Public Sector

Finance professionals

CPD

Improve Risk

Management in PS

Skilled High Performing Effective

Better Public Sector Financial ManagementPaving the way for IPSAS/SLPSAS Implementation

Skilled High Performing Effective

Capital Markets development

Capital Markets Development

Proposals

Strengthen CASL policy

advocacy role locally

and globally

Improve CG in line with global developme

nts

Improve Risk

Management Practices

within companies

Implement Audi

Quality Assurance programme

Improve Corporate Reporting

Facilitate effective

implementation of IFRS and reduce variability in interpretatio

n

Skilled High Performing Effective

Provincial Development & Effective Inclusion

Reduce disparity in facilities for students/

members in provinces

Develop SMEs & SMPs

Provide alternate

career paths to cater to employer

requirements

Improve Professional Education &

Training

IT Infrastructur

e

• Inclusion of provinces for sustainable economic growth• Improved access to finance for SME`s through better accounting and financial reporting

Institutional Capacity Building

Effective implementation of

strategy and compliance with

IFAC membership obligations

Examination process to be

relevant to current employer

requirements and in line with IFAC

membership obligations

A modern Financial Training Centre for the sub continent of South Asia and a venue

for public and private sector with capability to link

globally

Campaigns to educate public on matters necessary for progress of the

profession

• Enable scalability of solutions• Provincial development and effective inclusion• Modernise to meet employer requirements• Effective and efficient performance

ROSC 62

Q & A

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Thank You

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