Financial Reporting Environment in Sri Lanka

Governing Institutions in the Organizational Key Governing Laws and Major Implications for Accounting, Auditing and
Interface and Their Primary Functions Codes of Best Practice Corporate Governance
1. Regulatory Bodies
The Central Bank of Sri Lanka (CBSL)  Banking Act (No. 30) 1988 amended by Act External Reporting: Formats of financial statements;

(Applicable to banks) (No. 33) 1995 and Act (No. 46) of 2006 continuous reporting system; publication of quarterly
 Administers the Banking Act  Directions, circulars and guidelines issued by financial statements
 Approves bank auditors the Central Bank of Sri Lanka External Auditing: List of qualified auditors; list of
 Approves accounting and auditing standards for  Code of Corporate Governance for Licensed restricted non-audit services; guidelines for external
banks Banks in Sri Lanka, 2008 auditors
 Determines formats and disclosure requirements Corporate Governance: Mandatory code of
for financial statements corporate governance 2008; prudential regulations and
supervisory practices

Registrar of Companies (RC)  Companies Act (No. 7) 2007 External Reporting:

Maintenance of proper books
of

(Applicable to public limited companies) accounts; preparation of financial statements;

 Administers the Companies Act certification of financial statements by the officer
responsible for that purpose; details of AGM and annual
report
External Auditing: Appointment of external auditor;

details of external audit report

Corporate Governance: Qualifications and

responsibilities of directors; rights of shareholders

Other Government Agencies:
The Department of Public Enterprises (DPE),
Strategic Enterprise Management Agency
(Applicable to public enterprises)
 Provide institutional framework for public
enterprises
Governing Institutions in the Organizational
Interface and their Primary Functions
2. Professional Accounting Bodies
The Institute of Chartered Accountants of
Sri Lanka (ICASL)
(Applicable to specified business enterprises)
 Approves accounting and auditing standards
 Supports the activities of the Accounting
Standards Committee (ASC) and Auditing
Standards Committee (AuSC)
Accounting Standards Committee (ASC)
 Develops accounting standards
Auditing Standards Committee (AuSC)
 Develops auditing standards
 Articles 148 to 154 of the 1978 Constitution of External Reporting & External Auditing: Time
Sri Lanka relating to public financial frames for preparation of audited financial statements;
management and regulations appointment of external auditor
 Regulations, rules, circulars and directives of
the General Treasury
Key Governing Laws and Major Implications for Accounting, Auditing and
Codes of Best Practice Corporate Governance
 Sri Lanka Accounting and Auditing Standards External Reporting: Requirements of Sri Lanka
Act (No. 15) 1995 Accounting Standards (LKASs) based on International
 Code of Best Practice on Corporate Financial Reporting Standards (IFRS)
Governance, 2017 External Auditing: Requirements of Sri Lanka
Auditing Standards (SLAuS) based on International
Standards on Auditing (ISA); and Sri Lanka Auditing
Practice Statements (SLAPS) based on International
Auditing Practice Statements (IAPS)
Corporate Governance:
Code of Best Practice on
Corporate Governance 2017 (partnered with SEC)
 Sri Lanka Accounting and Auditing Standards External Reporting: Develops based on the
Act (No. 15) 1995 respective IFRS
 Sri Lanka Accounting and Auditing Standards External Auditing: Develops
SLAuS based on the
Act (No. 15) 1995 respective ISA; develops SLAPS based on IAPS
Sri Lanka Accounting and Auditing Standards
Monitoring Board (SLAASMB)
 Monitors the application of accounting and
auditing standards
3. Capital Markets
Securities and Exchange Commission (SEC)
(Applicable to companies registered in the CSE
official list)
 Administers the Securities and Exchange
Commission of Sri Lanka Act
 Oversees the Colombo Stock Exchange
Colombo Stock Exchange (CSE)
(Applicable to companies registered in the CSE
official list)
 Monitors the listing rules
 Sri Lanka Accounting and Auditing Standards
Act (No. 15) 1995
 Securities and Exchange Commission of Sri
Lanka Act (No. 36) 1987 amended by Act
(No. 26) 1991 and Act (No. 18) 2003
 Rules on Corporate Governance for Listed
Companies, 1990
 Guidelines for Appointment of Auditors of
Listed Companies, 2008
 Code of Best Practice on Corporate
Governance, 2017
 Colombo Stock Exchange Listing Rules
External Reporting & External Auditing: Monitors
the Specified Business Enterprises (SBE) to ascertain
their conformity with SLAS and SLAuS
External Reporting: Routine and non-routine
disclosures; declaration of CEO and CFO ensuring
true and fair view of financial statements
External Auditing: Criteria in relation to
qualifications, appointment, rotation of partners, and
independence of auditors
Corporate Governance: Code of Best Practice on
Corporate Governance 2017 (Partnered with CA Sri
Lanka)
External Reporting: Rules on continues reporting
requirements
Corporate Governance: Rules on corporate
governance