Q: What is the legal status of SLAASMB?

A: SLAASMB is a Statutory Board established under Act No. 15 of 1995

Q: Is SLAASMB a Government organization?

A: Yes. SLAASMB has been established under a Parliamentary Act and is financed by the funds voted from the consolidated fund of the Government of Sri Lanka

Q: What is the Ministry that oversee SLAASMB?

A: Line Ministry to which SLAASMB reports is the Ministry of Finance

Q: What is meant by SLAASMB being an Independent Regulator?

A: SLAASMB has 13 members on the Board and the Practicing Members at present are only 3. Accordingly, SLAASMB is independent of the profession.

Q: SLAASMB is referred as a regulator. What does SLAASMB regulate?

A: SLAASMB monitors financial statements prepared by economically significant entities for compliance with Sri Lanka Accounting Standards (SLAS) and monitors auditors of such financial statements for compliance with Sri Lanka Auditing Standards (SLAuS) when conducting audits of such entities.

Q: What is the role of SLAASMB relating to operations of an entity?

A: SLAASMB monitors compliance with Sri Lanka Accounting Standards (SLAS) when preparing the financial statements of an entity. As the SLASs are reporting standards, SLAASMB’s mandate is to report on deviations from SLASs when the financial statements are presented. Effectiveness and efficiency of the conduct of the business does not come within the said reporting standards and accordingly are not regulated by SLAASMB. However, due to the results of ineffective operations by the business, if the realizable value of the assets fall below the carrying values of the assets of such entity or such operations cause to understate the liabilities of such entity, failure to reflect such decline in values comes within the purview of SLAASMB. Similarly, as reporting standards, SLASs require additional information to be disclosed to enable the users to make informed decisions. Thereby based on the significance of the transaction, appropriate disclosure relating to such ineffective management would provide information to the users to make informed decisions.

Q: In performing the regulatory functions, does SLAASMB regulate all deviations from Sri Lanka Accounting Standards (SLAS)?

A: No. SLAASMB regulates deviations from Sri Lanka Accounting Standards which are material in nature

Q: Are all entities in the country regulated by SLAASMB?

A: No. The entities which come within the mandate of SLAASMB are specified in the Schedule to the Act No. 15 of 1995 and are referred as Specified Business Enterprises (SBEs) in the Act.

Q: What is a Specified Business Enterprise (SBE) ?

A: A SBE is an entity which meets the criteria stipulated in the Schedule to the Act No. 15 of 1995

Q: Do all government entities come within the purview of SLAASMB

A: No. The Government entities which come within the purview of SLAASMB are Government Corporations which are engaged in the sale of goods or provision of services

Q: How does SLAASMB regulate deviations from Sri Lanka Auditing Standards?

A: All the audit firms which engage as auditors of SBEs fall within the purview of SLAASMB. Accordingly, SLAASMB is empowered to inspect the audit of the SBEs.

Q: Does SLAASMB regulate the audits performed by the Auditor General?

A: SLAASMB does not regulate the work performed by the Auditor General since the Auditor General has been appointed by the Constitution of the Government of Sri Lanka. However, SLAASMB regulates the financial statements audited by the Auditor General.

Q: Does SLAASMB regulate compliance with Public Sector Accounting Standards?

A: No. Act No. 15 of 1995 does not mandate SLAASMB to regulate the compliance with Public Sector Accounting Standards

Q: What should SBEs do when they receive a letter from SLAASMB?

A: Your response depends on the type of letter you receive as follows.

• Letter requesting to submit financial statements to SLAASMB

You will receive this letter since you have not submitted the audited financial statements of the relevant year to SLAASMB. Since submission of audited financial statements of a SBE to SLAASMB is a mandatory requirement under section 25(1) of the Act No. 15 of 1995, you are required to submit the financial statements within the time frame stipulated in the letter. If you have failed to submit the audited financial statements despite such a follow up letter, you are required to submit the reasons for failure to submit information to SLAASMB since failure to submit the financial statements is a punishable offence under section 27 of the Act.

• Letter of Observation

You will receive a letter explaining that your financial statements have been reviewed and stating that non-compliances have been observed. This letter being the mode of communication of observations of the review of your financial statements, you are required to complete the feedback form attached thereto and return to SLAASMB within the period specified in the letter and to comply to the matters highlighted in the letter in your future financial statements.

• Letter of Undertaking to correct the financial statements

You may receive this letter explaining that your financial statements have been reviewed and significant non-compliances have been observed which warrant a correction in the financial statements as stated therein. You are asked to respond to the letter stating whether you are in agreement to take the steps specified in the said letter within the period specified in therein.

• Request for information or additional information

You may receive this letter asking for information or additional information and explanations for SLAASMB staff to clarify matters reflected in your financial statements. You are expected to respond to the letter with all relevant information within the period specified in therein.

Q: When the Consolidated financial statements of Group Companies have been submitted to SLAASMB, is there any requirement to submit the financial statements of the subsidiary or associate Company as well?

A: In group Companies, the financial statements to be submitted to SLAASMB should be the Consolidated financial statements of the group together with the parent’s separate financial statements. In addition, if any subsidiary or associate of the group becomes a SBE on its own, such subsidiary or associate is required to submit the individual financial statements as well, to SLAASMB.

Q: Dose SLAASMB provide technical clarifications/ interpretations to SBEs/ general public?

A: No. technical clarifications/ interpretations are provided by CA Sri Lanka. Accordingly, SLAASMB does not provide such assistance.

Q: Does SLAASMB set the Sri Lanka Accounting Standards (SLAS) and Sri Lanka Auditing Standards (SLAuS)?

A: No. SLASs in effect are aligned with the International Financial Reporting Standards and SLAuSs are aligned with International Standards on Auditing. Promulgation of SLASs and SLAuSs fall within the mandate of the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka). Accordingly, SLAASMB does not set SLASs .

Q: What is meant by compliance with Sri Lanka Accounting Standards?

A: Sri Lanka Accounting Standards specifies recognition and measurement of transactions and events based on specific criteria and the applicable disclosure and presentation. Accordingly, the relevant standards needs to be adhered to when preparing and presenting the financial statements.

Q: Are all entities required to comply with Sri Lanka Accounting Standards (SLAS)?

A: No, entities required to comply with SLASs are entities identified as Specified Business Enterprises (SBEs) in the Schedule to the Act No 15 of 1995

Q: Should an entity prepare all its financial statements in compliance with SLASs?

A: No. The adoption of SLASs are mandatory when the financial statements prepared are general purpose financial statements and when the financial statements meet the definition of a Specified Business Enterprise.

Q: Does entities adopting Sri Lanka Accounting Standards for Small and Medium Sized Entities (SMEs) also come within the mandate of SLAASMB?

A: Entities who meets the criteria laid down in the Act for a Specified Business Enterprises and adopts the SME Standard, comes within the purview of SLAASMB.

Q: If small entities are not required to comply with Sri Lanka Accounting Standards, what standards should they adopt?

A: Small entities are required to adopt Sri Lanka Accounting Standards for Smaller Entities (SLFRS for Smaller entities). Such entities do not fall within the mandate of SLAASMB Q : Who can audit financial statement of SBEs? A: Members of CA Sri Lanka holding a certificate to practice.

Q: Do auditors have to comply with Sri Lanka Auditing Standards (SLAuS) when conducting audits of all entities?

A. Yes. Audits of SBEs should be carried out by members of CA Sri Lanka (CAs). Members of CA should conduct audits in accordance with SLAuSs. SLAuSs includes SLAuSs applicable to SBEs and SLAuS applicable to non-SBEs. Accordingly, audits of all entities have to be conducted in accordance with the applicable SLAuS.

Q; Are the SBEs required to submit their financial statements to SLAASMB annually?

A: Yes. All SBES are required to submit two copies of the annual audited financial statements to SLAASMB along with the independent auditor’s report thereon

Q: Are the SBEs required to submit the original signed copies of financial statements to SLAASMB?

A: Original signed copies of financial statements are not required. If the entity publish an Annual Report, such Annual Report should be submitted and if no Annual Report is published by the entity, copies of signed financial statements should be submitted

Q: Should the SBEs submit the quarterly financial reports to SLAASMB?

A: No. Only annual audited financial statements should be submitted, unless specifically requested by SLAASMB

Q: Can the SBEs submit the electronic copy of the financial statements to SLAASMB?

A: If electronic copies of audited financial statements are available, SLAASMB encourage the preparers to submit an electronic copy. However, a hard copy of the audited financial statements should also be submitted.

Q: Is there a specific time frame to submit financial statements to SLAASMB?

A: As per the Companies Act No. 7 of 2007, the financial statements should be submitted to shareholders within 6 months of the yearend. Accordingly, at the time the audited financial statements are submitted to the shareholders, two copies should be submitted to SLAASMB

Q: Is submission of financial statements required when an identified SBE cease to meet any of the required criteria?

A: No. In such an instance such entities are identified as Non-SBEs and thereby are not required to submit financial statements. However, such entity is required to submit the financial statements for the period during which the entity was a SBE.

Q: If a company that meets the criterial to become a SBE has not submitted financial statements to SLAASMB in the past, are they required to submit all the relevant FSs?

A: No. SLAASMB requires such SBE to submit the annual audited financial statements commencing from the past five years

Q: When a SBE publishes an Annual Report, should the entity submit the audited financial statements or the Annual Report?

A: It is recommended to submit the Annual Report since the audited financial statements are a component if it

Q: When the functional currency of the SBE is a currency other than LKR, financial statements prepared in which currency should be submitted to SLAASMB?

A: It is recommended to submit financial statements prepared in both currencies

Q: In relation to Act No. 15 of 1995, what are the offences which could be committed by a SBE or auditor?

A: Offenses are; • Failure to prepare the financial statements in compliance with SLASs and to conduct the audit in accordance with SLAuS. • Failure to submit the annual audited financial statements to SLAASMB • Failure to submit the Information requested by SLAASMB • Failure to appear before the officers of SLAASMB when informed in writing or summoned • Failure to correct the financial statements or the audit procedures as required by SLAASMB • Willful submission of incorrect t information

Q : Where can I find SLAASMB’s findings and significant cases?

A: Findings can be found in http://slaasmb.gov.lk

Q: Can someone make a complaint to SLAASMB regarding malpractices in an Entity?

A: Yes. They can refer the complaints to the Director General. SLAASMB will inquire in to the complaint and if the complaint relates to the violation of Sri Lanka Accounting Standards in relation to annual audited financial statements, or to the violation of Sri Lanka Auditing Standards in the conduct of the audit of the financial statements, SLAASMB will take required enforcement action.

Q: Does SLAASMB keep the complainant informed of the outcome of the complaint?

A: SLAASMB is not in a position to keep the complainant informed of the progress of the investigation and the outcome of the investigation, as it would undermine our policy on releasing confidential information to the public. However, SLAASMB will send an acknowledgement to you on the receipt of the complaint.