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.
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.