IFRS convergence experience – Sri Lanka

W.A.U. Wijesingha

Senior Technical Manager

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IFRS convergence experience – Sri Lanka

Contents:

• Overview of Economic Indicators

• Financial Reporting Framework in Sri Lanka

• Status of IFRS Convergence

• Experience in Convergence process

• Challenges in implementation

• Way forward

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IFRS convergence experience – Sri Lanka

Overview of Economic Indicators

Economic Growth rate is 8.2 %

Fast Growing Economy in Asia.

International investors call for comparable financial information from countries competing for foreign investment.

Compliance with international standards is essential to meet investors’ requirements and to reduce risk premium on cost of capital.

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IFRS convergence experience – Sri Lanka

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• Compliance of Listed Companies

• True and Fair view of Financial Statements

• Governance

• Standard Setting

Audit Regulation

Corporate Governance

• Compliance of SBEs

• Compliance of Auditors

SLAASMB ICASL

SEC

ROC

Central Bank

Insurance Board

Financial Reporting Framework in Sri Lanka

IFRS convergence experience – Sri Lanka

Fast tracked adoption of 2011 BV of all IASs/ IFRS with effect from 01/01/2012.

Converge with IFRS 2012 BV from 01 Jan 2013.

Use of same numbering in line with IAS/ IFRS.

All IFRS are titled as SLFRS and all IAS are titled as LKAS.

Inclusion of all IFRICs & SICs as an integral part of the Sri Lankan financial reporting framework.

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Status of IFRS Convergence

IFRS convergence experience – Sri Lanka

• Publication of all Standards, IFRICs, SICs, Guidance Notes and Bases of Conclusion.

• Adoption of SME Standard.

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Status of IFRS Convergence

IFRS convergence experience – Sri Lanka

Status of IFRS Convergence

IFRS Convergence – Summary

(Based on 2011 BV - effective from 01/01/ 2012 )

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IFRS convergence experience – Sri Lanka

Status of IFRS Convergence

IFRS Convergence - Summary

( Standards effective from 01 / 01 / 2013)

• IFRS 10 - Consolidated financial statements

• IFRS 11 - Joint arrangements

• IFRS 12 - Disclosure of interests in other entities

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IFRS convergence experience – Sri Lanka

Experience in Convergence process - Banks

• Separate Task force - IFRS implementation

• Central Bank of Sri Lanka.

• Bankers’ Association

• Auditors

• CA Sri Lanka

• Develop Guidelines for the Presentation of Comparative information.

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IFRS convergence experience – Sri Lanka

Experience in Convergence process – SMEs

• More than 90% of the entities in the Economy.

• Localized definition to SMEs.

• Council decision to translate it into local

languages.

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IFRS convergence experience – Sri Lanka

Challenges in implementation

• Resource constraints in IFRS application.

• Impact of IFRS on taxation.

• Translation of Standards into Local languages

• Most of the Fair Value indicators are Non - Observable.

• Lack of valuation professionals.

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IFRS convergence experience – Sri Lanka

Way forward

• Implementation of IFRS 13 – Fair Value Measurement.

• Uniformity in the valuation for financial reporting.

• Implementation Task forces for Other Sectors.

Eg :- Plantation.

• Regional Collaboration.

• “Right-of-use asset” concept in accounting for leases on immovable property.

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IFRS convergence experience – Sri Lanka

Status of IFRS Convergence

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IFRS convergence experience – Sri Lanka

Status of IFRS Convergence

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IFRS convergence experience – Sri Lanka

Status of IFRS Convergence

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IFRS convergence experience – Sri Lanka

Status of IFRS Convergence

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IFRS convergence experience – Sri Lanka

Thank you.

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