Sri Lanka Accounting and Auditing Standards Act No. 15 of 1995

1. Sri Lanka Accounting and Auditing Standards Act No. 15 of 1995

2. International Accounting Standards (IAS) Setting Process • The Council of the Institute of Chartered Accountants Sri Lanka (ICASL) has adopted the rule that the Sri Lanka Accounting Standards (SLAS) to be set in line with IAS.

3. International Accounting Standards (IAS) Setting Process • International Accounting Standards (IAS) are adopted by the International Accounting Standards Committee (IASC)

4. Australia Canada France Germany Japan Mexico Netherlands, United States of America. United Kingdom International Accounting Standards Committee (IASC) • An independent private sector body • objective is to achieve uniformity in the accounting principles which are used by businesses and other organizations for financial reporting around the world. • formed in 1973 through an agreement made by professional accountancy bodies from: Ireland

5. International Accounting Standards Committee (IASC) • Since 1983, IASC’s members have included all the professional accountancy bodies that are members of the International Federation of Accountants (IFAC). • Many other organizations are now involved in the work of IASC and many countries that are not members of IASC make use of International Accounting Standards.

6. International Accounting Standards (IAS) Setting Process • The Board sets up a Steering Committee. Each Steering Committee is chaired by a Board Representative and usually includes representatives of the accountancy bodies in at least three other countries. • The Steering Committee identifies and reviews all the accounting issues associated with the topic. The Steering Committee considers the application of IASC’s Framework for the Preparation and Presentation of Financial Statements to those accounting issues.

7. International Accounting Standards (IAS) Setting Process • Having considered the issues involved, the Steering Committee may submit a Point Outline to the Board. • After receiving comments from the Board on the Point Outline, if any, the Steering Committee normally prepares and publishes a Draft Statement of Principles or other discussion document • Comments are invited from all interested parties during the exposure period, usually around three months.

8. International Accounting Standards (IAS) Setting Process • The Steering Committee reviews the comments on the Draft Statement of Principles and normally agrees a Final Statement of Principles, which is submitted to the Board for approval and used as the basis for preparing an Exposure Draft of a proposed International Accounting Standard. • The Steering Committee prepares a Exposure Draft for approval by the Board. After revision, and with the approval of at least two-thirds of the Board, the Exposure Draft is published. Comments are invited from all interested parties during the exposure period, a minimum of one month, and usually at least three months.

9. International Accounting Standards (IAS) Setting Process • The Steering Committee reviews the comments and prepares a draft International Accounting Standard for review by the Board. After revision, and with approval of at least 3/4 of the Board, the Standard is published.

10. Accounting Standards Setting Process in Sri Lanka • Sri Lanka Accounting and Auditing Standards Act No.15 of 1995 (SLAAS 1995) empowers the Institute of Chartered Accountants of Sri Lanka to adopt Sri Lanka Accounting Standards and Sri Lanka Auditing Standards

11. Accounting Standards Setting Process in Sri Lanka • SLAAS-1995 brought into existence a committee known as Accounting Standards Committee to make recommendations or otherwise assists ICASL in the adoption of SLAS

12. Accounting Standards Setting Process in Sri Lanka Accounting Standard Committee shall consists of • The President of the ICASL • Five members of ICASL nominated by the Council • One member representing CIMA Sri Lanka Division • The Registrar of Companies. • The Director General of the CSE • One member to represent the Central Bank of SL • One member nominated by the Cey.Cha.Com • One member nominated by the Federation of Chambers of Commerce and Industry of Sri Lanka.

13. Accounting Standards Setting Process in Sri Lanka Accounting Standards Committee has decided to keep Sri Lanka Accounting Standards in line with International Accounting Standards International Accounting Standards adopted by the IASC are studied by the Accounting Standards Committee with a view to adopting them as Sri Lanka Accounting Standards

14. Accounting Standards Setting Process in Sri Lanka The due process followed by the Accounting Standards Committee in the adoption of SLAS • A sub committee is appointed to study the IAS, with a view to adopt it as a SLAS. The sub- committee is chaired by a member of the Accounting Standards Committee • The IAS is sent to parties identified by the Accounting Standards Committee as those primarily interested in SLAS, calling for comments

15. Accounting Standards Setting Process in Sri Lanka The due process followed by the Accounting Standards Committee in the adoption of SLAS • The sub committee studies the IAS with a view to adopt it as a SLAS, taking into account any comments received from other parties. • A draft SLAS is prepared by the sub-committee with necessary modifications, and presented to the Accounting Standards Committee.

16. Accounting Standards Setting Process in Sri Lanka The due process followed by the Accounting Standards Committee in the adoption of SLAS • A public seminar is held by the Accounting Standards Committee, to explain the proposed SLAS, and to obtain further comments from the public • The sub committee reviews the draft SLAS based on the comments made at the public seminar, and recommends to the SLAS for adoption to the Accounting Standards Committee.

17. Accounting Standards Setting Process in Sri Lanka The due process followed by the Accounting Standards Committee in the adoption of SLAS • The Accounting Standards Committee discusses the proposed standard with the chairman of the sub committee and decides on the final standard to be recommended to the council for adoption.

18. Auditing Standards Setting Process in Sri Lanka SLAAS-1995 brought into existence a committee known as Auditing Standards Committee to make recommendations or otherwise assists ICASL in the adoption of SLAuS

19. Auditing Standards Setting Process in Sri Lanka Auditing Standard Committee shall consists of eight members of the institute nominated by the council of the ICASL At least four of them shall be members of the Accounting Standards Committee

20. Accounting Standards Setting Process in Sri Lanka The due process followed by the Auditing Standards Committee in the adoption of SLAuS Auditing Standards Committee has decided to keep Sri Lanka Auditing Standards in line with International Standards on Auditing issued by the International Auditing Practicing Committee (IAPC) of the International Federation of Accountants Adoption of SLAuS follows a similar process as for the adoption of SLAS. Sri Lanka Auditing Standards are based on International Standards on Auditing (ISA) published by the IAPC

21. Sri Lanka Accounting and Auditing Standards Act No. 15 of 1995 Application of SLAS and SLAuS As per Section 2 and Section 3 of the Sri Lanka Accounting and Auditing Standards Act No. 15 of 1995 SLAS and SLAuS adopted by the council of ICASL shall be applicable to all business enterprises given below (SBE). Listed companies Unit Trusts Banks Leasing companies Insurance companies Stock Markets Sock Dealers Public Corporations All other companies which exceeds prescribed limites Turnover exceeding 500m Liabilities 100m Assets value 300m Equity 100m Employees over 1000

22. Sri Lanka Accounting and Auditing Standards Act No. 15 of 1995 Duty to comply with SLAS and SLAuS Duty of every SBE to prepare its accounts in compliance with the Sri Lanka Accounting Standards and take all necessary measures to ensure that its accounts are audited in accordance with Sri Lanka Auditing Standards Auditing of SBE to be done by Qualified Auditors Accounts of every SBE shall be audited by professionally qualified auditors who shall be members of the Institute holding a certificate to practice.