Penalties and other Implications

Every person who fails to comply with the requirements of the Act shall be guilty of an offence under this Act, and shall on conviction after a summary trial before a magistrate be liable to fine not exceeding five hundred thousand rupees.

Where a person is convicted of an offence under this Act and the Court holds that the Act constituting such offence was done with the intention of misleading the shareholders of a specified business enterprise or any financial institution dealing with such specified business enterprise or the Inland Revenue Department or where a licensed commercial bank is convicted of an offence under this Act and court holds that the Act constituting the offence was done with the intention of misleading the depositors of such bank, the court may sentence the offender to imprisonment of either description for a term not exceeding five years.

Where an offence under this Act, is committed by a body corporate, any person who is at the time of the commission of the offence, a director, manager, secretary or other similar officer of that body corporate shall be deemed to be guilty of that offence unless he proves that the offence was committed without his knowledge or connivance and that he exercised all such diligence to prevent the commission of that offence as he ought to have exercised having regard to the nature of his functions and all the circumstances of the case.

Where any accountant of any specified business enterprise violates any provision of this Act, it shall be duty of the Board to bring such violation to the notice of any professional body of which such accountant is a member for the purpose of enabling such body to take appropriate action against such accountant.

Where any specified business enterprise has failed to act in compliance with provisions of this Act, it shall be the duty of the Board to bring such fact to the notice.

of any authority which is empowered by law to regulate or supervise the activities of such specified business enterprise; and
of the Inland Revenue Department if the Board considers that such non- compliance has resulted in a substantial reduction of the tax liabilities of such specified business enterprises.

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Latest Findings

Local Loans and Development Fund (2023)
- Not applying the requirements of Sri Lanka Accounting Standard SLFRS 9, when preparing and presenting the financial statements for the year ended 31 December 2021, when SLFRS 9 is effective (References: Paragraph 7.1.1. of SLFRS 9).

Nawaloka Hospitals PLC (2023)
- Failing to maintain proper accounting records and not providing the required information to the auditor for the financial year ended 31 March 2022 (Reference: Section 6 (1) of the Sri Lanka Accounting and Auditing Standards Act No. 15 of 1995).

State Engineering Corporation of Sri Lanka (2022)
   - Incorrectly recognizing a deferred tax asset relating to tax losses without assessing the availability of the future taxable profits.
   - Not amalgamating the revenue from all the projects in the financial statements.
   - Not recognizing an adequate allowance for impairment (LKAS 39)
   - Not making a reliable estimate of the long overdue payable for VAT, GST and NSL by not reconciling the differences between the payable balance recognized in the financial statements and the payable balance confirmed by the Inland Revenue Department.

Sri Lanka Cement Corporation (SLCC) (2022)
- Not reflecting the investment in equity shares at its fair value (Paragraph 5.2.1 of SLFRS 9).
- Not recognizing certain lands in the financial statements of which SLCC has the control, right and potential to produce economic benefits from the lands (Paragraph 15 of LKAS1).

Contact Us

Sri Lanka Accounting and Auditing Standards Monitoring Board
3rd floor Bible House Building,
293 Galle Road, Colombo 3, Sri Lanka
94-11-2301210
94-11-2301211