1
Sri Lanka Accounting and Auditing
Standards Monitoring Board
(SLAASMB)
Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura, Colombo - Sri Lanka
kingsley_k2000@yahoo.com.
2
Duties of Specified Business
Enterprises (SBEs)
Prepare its financial statements in
compliance with Sri Lanka Accounting
Standards.
Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura, Colombo - Sri Lanka
kingsley_k2000@yahoo.com.
3
Duties of Specified Business
Enterprises (SBEs)
• Take all necessary measures to ensure
that the financial statements are
audited in accordance with Sri Lanka
Auditing Standards with the object of
presenting a true and fair view of the
financial performance and financial
position of such enterprise.
Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura, Colombo - Sri Lanka
kingsley_k2000@yahoo.com.
4
Duties of Specified Business
Enterprises (SBEs)
To have the financial statements audited
by members of the Institute of Chartered
Accountants of Sri Lanka holding a
certificate to practice, issued by the
Institute.
Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura, Colombo - Sri Lanka
kingsley_k2000@yahoo.com.
5
Duties of SBEs
Submit a copy of the annual financial
statements of the enterprise to
the SLAASMB, to enable the Board to
determine whether the financial
statements have been prepared in
compliance with Sri Lanka Accounting
Standards, and
Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura, Colombo - Sri Lanka
kingsley_k2000@yahoo.com.
6
Duties of SBEs
To furnish to the Board or to any person authorized by
the Board any information pertaining to its financial
statements as may be required
by the Board or any person
authorized by the Board within
such time, as may be specified
in a notice issued by the
Board or any person
authorized by it.
Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura, Colombo - Sri Lanka
kingsley_k2000@yahoo.com.
7
Duties of Auditors
• The financial statements of every
specified business enterprise shall
be audited by a member of the
Institute of Chartered Accountants
of Sri Lanka holding a certificate to
practice issued by the institute.
Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura, Colombo - Sri Lanka
kingsley_k2000@yahoo.com.
8
Duties of Auditors
• The Act requires the auditors to certify
in their audit report that the audit has
been conducted in accordance with
Sri Lanka Auditing Standards and
that the financial statements have been
prepared and presented in accordance
with Sri Lanka Accounting Standards.
True & Fair
Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura, Colombo - Sri Lanka
kingsley_k2000@yahoo.com.
9
Duties of Auditors
• Where any Qualified Auditor fails to comply with the Sri Lanka
Accounting Standards and the Sri Lanka Auditing Standards as
required by the Act, he shall specify clearly,
- the deviation made
- reasons for such deviations
SLAS
Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura, Colombo - Sri Lanka
kingsley_k2000@yahoo.com.
10
The Sri Lanka Accounting and Auditing
Standards Monitoring Board
(SLAASMB)
The Sri Lanka Accounting and
Auditing Standards Monitoring
Board was established by the
Act No.15 of 1995.
Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura, Colombo - Sri Lanka
kingsley_k2000@yahoo.com.
11
Functions of the Board
To monitor the compliance with the Sri
Lanka Accounting and Auditing
Standards by the Specified Business
Enterprises
SLAuS
Monito
r
SLAS
Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura, Colombo - Sri Lanka
kingsley_k2000@yahoo.com.
12
The Sri Lanka Accounting and Auditing
Standards Monitoring Board
(SLAASMB)
 All members of the
Board are either exofficio
members
by
virtue of the holding of a
specified public office, or
are members appointed
out
of
persons
nominated by specified
institutions.
Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura, Colombo - Sri Lanka
kingsley_k2000@yahoo.com.
13
The SLAASMB consists of the following
members
 Three members ("ex officio members") who
shall be the persons holding office as
1.
Registrar of Companies;
2
Commissioner General of Inland Revenue
3
Director General of the SEC of Sri Lanka
ROC
CIR
DSEC
Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura, Colombo - Sri Lanka
kingsley_k2000@yahoo.com.
14
The SLAASMB consists following members
Ten members appointed by the Minister
("appointed members")
1. An officer of the Central Bank nominated by the
Governor of the Central Bank.
2. Three members of the Institute selected from
among persons nominated by the Institute.
3. A member of the Chartered Institute of
Management Accountants of the United Kingdom
selected from among three members nominated by
the Sri Lanka Division of the Institute.
Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura, Colombo - Sri Lanka
kingsley_k2000@yahoo.com.
15
The SLAASMB consists of the following
members
4. One senior lawyer selected from among three senior lawyers
nominated by the Bar Association of Sri Lanka.
5. Two experienced company directors from SBEs
(one of whom shall be selected from a panel of three names
submitted by the Ceylon Chamber of Commerce, and the other
from a panel of three names submitted by the Federation of
Chambers of Commerce and Industry of Sri Lanka.)
6. One Senior Banker selected from a panel of three bankers
nominated by the Sri Lanka Banks’ Association
7. One person selected from a panel of three persons
nominated by the University Grants Commission.
Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura, Colombo - Sri Lanka
kingsley_k2000@yahoo.com.
16
Investigative Powers of the SLAASB
The Board or any person duly authorized by the Board may:
1.
By notice in writing require a SBEs
or its auditors to furnish to the Board or
to a person authorized by the Board
any information pertaining to its
financial statements and it shall be the
duty of such SBES or its auditors
to comply with such requirement within
the time specified in the notice .
(Above notice has to be issued not
later than one
year after the specified business enterprises has submitted
the relevant financial statements to the Board.
There is no time limit to
exercise the other powers.)
Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura, Colombo - Sri Lanka
kingsley_k2000@yahoo.com.
Investigative Powers of the
SLAASB
The Board or any person duly authorized
by the Board may:
2. To summon and question any director, officer
or auditor
of any specified business enterprise
on any matter pertaining to the preparation or
presentation of its financial statements
Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura, Colombo - Sri Lanka
kingsley_k2000@yahoo.com.
17
Investigative Powers of the
SLAASMB
The Board or any person duly authorized by
the Board may:
3. Carry out investigations or hold inquiries of any
director, officer or auditor of any SBEs to appear
before the board at any such investigation
or
inquiry or to produce any books or documents in
the possession or control of such director, officer or
auditor as are required for the purpose of such
investigation or inquiry.
Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura, Colombo - Sri Lanka
kingsley_k2000@yahoo.com.
18
19
Board’s Consideration of Public
Complaints
• The Board would welcome public complaints.
However, the Board would act with care and
caution to ensure that SBE are not unduly
harassed due to frivolous complaints.
Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura, Colombo - Sri Lanka
kingsley_k2000@yahoo.com.
20
Board’s Consideration on Media
Comments
• The Board would peruse
information published in the
media with a view to detect a
need to carryout an
investigation. Here too, the
Board would act with caution
to ensure that SBEs are not
unduly harassed.
Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura, Colombo - Sri Lanka
kingsley_k2000@yahoo.com.
21
Offences
1. Every
a. Persons who fails to Prepare its Accounts in
accordance with SLAS and take all necessary
measures to audit those accounts in compliance
with SLAuS,(non compliance with Sec. 6 & 7),….
b. Who fails to submit information or non
producing of documents requested by the board
during an investigation or knowingly furnishes any
false information,…..
Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura, Colombo - Sri Lanka
kingsley_k2000@yahoo.com.
22
Offences
c. Director, Officer of Auditor of a SBE who fails to
appear before the SLAASMB when required to do so or
who refuses to answer any question put him by the
Board or refuse to produce any book or document in his
possession or knowingly give false information,…..
Shall be Guilty of an Offence under this Act
After summary trial before a Magistrate be liable to a
Fine
not Exceeding
Rs. 500,000
Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura, Colombo - Sri Lanka
kingsley_k2000@yahoo.com.
23
Offences
Where a person is convicted of an offence under this
Act and the court holds that the offence was done with
the intension of misleading shareholders (Bankdepositors) court may sentence the offender to,
Imprisonment
Not exceeding
Five Years
Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura, Colombo - Sri Lanka
kingsley_k2000@yahoo.com.
24
Offences
Where an offence is committed by a body
corporate, A director, Manager,
Secretary or other similar officer
I Don’t
of that body corporate shall be
know
deemed to be guilty of that
offence (unless he proves
the offence was committed
by the firm without his
knowledge)
Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura, Colombo - Sri Lanka
kingsley_k2000@yahoo.com.
25
Compounding of Offences
The board may, having regard to the nature of the
offence, compound such offence for a sum of money
not exceeding one third of the fine imposable for such
offence
Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura, Colombo - Sri Lanka
kingsley_k2000@yahoo.com.
26
Contravenes to the Act that are not
Serious Nature
a. Direct such SBEs to have their accounts re-audited or
where such accounts have been published, to republish
them or to include suitable corrections in its accounts for
the following year.
AFMA
Company
2009
Financial
Statements
Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura, Colombo - Sri Lanka
kingsley_k2000@yahoo.com.
27
Contravenes to the Act that are not
Serious Nature
b. Where such SBE is a public company direct it to send
notification in writing to all its shareholders explaining the
reason for such noncompliance and the financial effect of
such noncompliance on the accounts
Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura, Colombo - Sri Lanka
kingsley_k2000@yahoo.com.
28
Contravenes to the Act that are not
Serious Nature
c.
Where such SBE is a public company listed in the
Colombo Stock Exchange (licensed by SECSL) to
send in addition a copy of notification to such
Commission and suck Stock Exchange.
Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura, Colombo - Sri Lanka
kingsley_k2000@yahoo.com.
29
Board to inform Professional Institutes of any
Violation
Where any accountant of any SBE violates any provision of
this Act, it shall be the duty of the board to bring such
violation to the notice of any professional body of which
such accountant is a member for the purpose of enabling
such body to take appropriate action against such
accountant
Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura, Colombo - Sri Lanka
kingsley_k2000@yahoo.com.
30
Board to inform regulatory authority and Inland
Revenue Department
Where any SBE has failed to comply with the provision of
this Act, it shall be the duty of the board to bring such
violation to the notice,
of any authority which is empowered by law to
regulate or supervise the activites of such SBE
of the Inland Revenue Department if the board
considers that such noncompliance has resulted in
a substatntial reduction of thhe tax liability of such
SBE
Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura, Colombo - Sri Lanka
kingsley_k2000@yahoo.com.
31
Practical Cases
The Sri Lanka Accounting and Auditing Standards
Monitoring Board (SLAASMB) acting under the Sri
Lanka Accounting and Auditing Standards Act No
15 of 1995 last week decided to release to the public
regarding significant cases detected during the 2004.
The significant cases detected in year 2004 are as follows.
1. Senkadagala Finance Company Limited
The Board issued a direction to Senkadagala Finance Company Limited
to send a notification to all parties who received the annual audited
financial statements explaining a related party transaction that was not
adequately disclosed in their financial staements.-
Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura, Colombo - Sri Lanka
kingsley_k2000@yahoo.com.
32
Practical Cases
2. W. M. Mendis & Company Limited
W. M. Mendis & Company Limited had not issued
consolidated financial statements for the year ended 31st
March 2003, consolidating the financial statements of Mendis
Carbon (Pvt) Limited which became a subsidiary during the
year. The auditors have not qualified their report in this
respect. Users of the financial statements of a parent of a group
of companies need to be informed about the financial position,
results of operations and changes in financial position of the
group as a whole. This need is served by consolidated financial
statements. Company agreed to consolidate the financial
statements of Mendis Carbon (Pvt) Ltd and to issue
consolidated financial statements of W. M. Mendis & Company
Limited for the year ended 31st March 2004.
Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura, Colombo - Sri Lanka
kingsley_k2000@yahoo.com.
33
Practical Cases
Exam type Question
ABC Limited a Public Quoted Company which
is listed in the Colombo Stock Exchange has
failed to comply with certain accounting
standards. The Board of Directors are of the
view that the contravention with the Sri Lanka
Accounting and Auditing Standards Act No. of
1995 is not of a serious nature. Advise the
directors as to what action SLAASMB may take
in this situation
Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura, Colombo - Sri Lanka
kingsley_k2000@yahoo.com.