Manufacturing and Services - Department of Accounting - University

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




Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura,
                   Colombo - Sri Lanka, kingsley_k2000@yahoo.com
                                                                                 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.




Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura,
                   Colombo - Sri Lanka, kingsley_k2000@yahoo.com
                                                                                 3



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




Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura,
                   Colombo - Sri Lanka, kingsley_k2000@yahoo.com
                                                                                 4


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: Australia
    Canada France Germany Japan Mexico Netherlands,
    United Kingdom Ireland United States of America.



Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura,
                   Colombo - Sri Lanka, kingsley_k2000@yahoo.com
                                                                                 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.


Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura,
                   Colombo - Sri Lanka, kingsley_k2000@yahoo.com
                                                                                 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.
Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura,
                   Colombo - Sri Lanka, kingsley_k2000@yahoo.com
                                                                                 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.
Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura,
                   Colombo - Sri Lanka, kingsley_k2000@yahoo.com
                                                                                 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.
Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura,
                   Colombo - Sri Lanka, kingsley_k2000@yahoo.com
                                                                                 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.




Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura,
                   Colombo - Sri Lanka, kingsley_k2000@yahoo.com
                                                                                 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



Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura,
                   Colombo - Sri Lanka, kingsley_k2000@yahoo.com
                                                                                 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



Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura,
                   Colombo - Sri Lanka, kingsley_k2000@yahoo.com
                                                                                   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.

Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura,
                   Colombo - Sri Lanka, kingsley_k2000@yahoo.com
                                                                                 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


Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura,
                   Colombo - Sri Lanka, kingsley_k2000@yahoo.com
                                                                                 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
Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura,
                   Colombo - Sri Lanka, kingsley_k2000@yahoo.com
                                                                                 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.

Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura,
                   Colombo - Sri Lanka, kingsley_k2000@yahoo.com
                                                                                 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.
Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura,
                   Colombo - Sri Lanka, kingsley_k2000@yahoo.com
                                                                                 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.




Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura,
                   Colombo - Sri Lanka, kingsley_k2000@yahoo.com
                                                                                 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




Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura,
                   Colombo - Sri Lanka, kingsley_k2000@yahoo.com
                                                                                 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


Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura,
                   Colombo - Sri Lanka, kingsley_k2000@yahoo.com
                                                                                 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
Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura,
                   Colombo - Sri Lanka, kingsley_k2000@yahoo.com
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    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

Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura,
                   Colombo - Sri Lanka, kingsley_k2000@yahoo.com
                                                                                 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.



Kingsley Karunaratne, Department of Accounting, University of Sri Jayewardenepura,
                   Colombo - Sri Lanka, kingsley_k2000@yahoo.com