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August 17, 2015

Sri Lankan industry passes World Bank’s test on standards

The World Bank (WB) has released one of its Reports on the Observance of Standards and Codes – Accounting & Auditing (ROSC A&A) assessing the Sri Lankan accountancy industry, which has improved since the last time it was under check in 2004.

The 2004 ROSC A&A issued 14 recommendations, of which seven have been successfully implemented, notably the country’s regulatory framework and its financial reporting system, while five others are close to completion.

The WB describes the Sri Lankan accountancy profession as "vibrant", with three local professional accountancy organisations (PAO) and two international ones operating in the country.

After the end of the civil war in 2009 socio-economic factors, such as its aspiration to become a state with upper-income levels by 2016 and eventually a regional business hub, have spearheaded the development of the accountancy profession, according to the WB.

The latest ROSC A&A, however, expressed that there is room for improvement, particularly in strengthening the regulation of auditors, quality of audit firms’ reviews, education of prospective accountants and continuing professional development for those already qualified.

Lakshman Watawala, president of the Institute of Certified Management Accountants of Sri Lanka (ICMA), told The Accountant that there are about 2,300 accountants registered as members of ICMA.

According to Watawala, the Institute of Chartered Accountants of Sri Lanka (ICASL), the oldest PAO which he presided for two terms in the past, has 5,500 members; and the UK-based Chartered Institute of Management Accountants (CIMA) about 4,000 members.

Both local PAOs are full members of the International Federation of Accountants (IFAC), ICMA since December 2014. The other global accountancy organisation operating in Sri Lanka is the Association of Chartered Certified Accountants (ACCA).

In addition, the fifth PAO operation in Sri Lanka is IFAC associate member’s the Association of Accounting Technicians, which Watawala contributed to set up during his tenure as president and council member of the ICASL in the eighties.

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