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Financial Reporting Environment in Sri Lanka

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Financial Reporting Environment in Sri Lanka
Introduction

The purpose of this report is to investigate the current financial reporting environment in Sri Lanka and its impact on the companies listed on the Colombo stock exchange. Hotel SIGIRIYA PLC has been chosen to study the financial reporting requirements, cultural impacts and the political influences on the Sri Lankan listed companies.

1. Financial Reporting Environment in Sri Lanka
1.1. Current financial reporting requirements for publically listed companies in Sri Lanka.
In August 2007, two stages were adopted by Sri Lankan accounting standards regulators to form the international Financial Reporting Standards (IFRS). They traversed from Stage I of IFRS Adoption to Stage III, due to the result of a “gap” between the international and national sets of standards in Sri Lanka. However, on 1 January 2012, the Institute of Chartered Accountants of Sri Lanka (ICASL) successfully adopted IFRS. (eStandards Forum, 2008, p. 5).

According to the Colombo Stock Exchange (2014) a requirement for a listed entity is that it must “ensure that the annual report is issued to the Entity’s shareholders and shall not exceed five (05) months from the close of the financial year of the Listed Entity when given to the Exchange”. Furthermore, publishing of the Audited Financial Statements must be in accordance with the Sri Lanka Accounting Standards.
(Colombo Stock Exchange 2014 -Listing Rules s.7.5 pg4)

The Colombo Stock Exchange (2014) also requires an Interim Financial Statement prepared by the listed entity. The Financial Statement must comply with the Sri Lanka Accounting Standards (SLA) 35.

They must include:
Any group and company results in the case of a Holding Company.
The additional notes and ratios as set out in Appendix 7B to the Rules.
Signatures of the two Directors.
And must state that the Financial Statements are not audited.
(Colombo Stock Exchange Listing Rules s.7.5 pg.5)
The preparation of a financial statement under IFRS,


Bibliography: Brandon Gipper, Brett Lombardi, and Douglas J. Skinner ,” The Politics of Accounting Standard-Setting: A Review of Empirical Research”, 2013, p.4. Gray, S. J. 1988. ``Towards a Theory of Cultural Influence on the Development of Accounting Systems Internationally. ' 'ABACUS, p.11. Deegan, C. (2002). The legitimizing effect of social and environmental disclosures: A theoretical foundation. Accounting, Auditing and Accountability Journal,15(3), p.292. (eStandards Forum, 2008, p. 5) eStandardsForum http://www.adoptifrs.org/uploads/Sri%20Lanka/US%20Department%20of%20State-2008%20Investment%20Climate%20Statement-Sri.pdf (World Bank, 2004, p World Bank. (2004). Sri Lanka: Report on the Observance of Standards and Codes – Accounting and Auditing. http://www.cse.lk/pdf/Section7_ContinuingListingRequirements.pdf Gunathilake W, Zoysa A, and Chandrakumara P (2011 Institute of Policy Studies (2005). Regulatory Impact Assessment: A Tool for Better Regulatory Governance in Sri Lanka, Colombo: Institute of Policy Studies. Weerakoon, S. T. (1995). ‘Public Enterprise Pathology: Sri Lanka’s Experience in Perspective’, Asian Journal of Public Administration, 17(2), pp. 302-321. La Porta, R., F. L. De-Silanes and A. Shleifer (1999). ‘Corporate Ownership Around the World’, The Journal of Finance, 54(2), pp. 471-517.
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