Are we ready for change? - Convergence of Sri Lanka accounting standards to international standards

Replies : 2

Come 2011 Sri Lanka will be keeping an important step in the field of financial accounting, as it will report the first comparative financial statements based on the international accounting standards. Simple as it may sound, it is not such an easy task!

The convergence from Sri Lanka accounting standards to the international standards will undoubtedly impact many areas of the business from sales and marketing to research and development to tax and strategy etc. It will carry total company wide impact and will require numerous system changes to capture the right information at source.  The main aim of the convergence is to be in line with international practices as the world becomes more and more integrated and interdependent. It will definitely serve as a positive in attracting FDIs in a post war economy by increasing comparability of investments across borders and enhanced transparency.

So, do you think Sri Lanka is ready to take on this challenge to be fully compliant with IFRSs by 2012? What more do we need to do to speeden and streamline the convergence process? 

IFRS in Sri Lanka

The implementation will take place for all listed companies from 2012/13 with comparatives for 11/12 also. It is certainly a challenge to meet the deadline. 

A lot of the standards are looking at extracting 'fair value' evaluations in a bid to have more 'dynamic' financial statements. While this is certainly useful, it leaves a lot to be done by those Managers who are actually working out these numbers. 

I feel that this might cause some confusion in the minds of ordinary investors and those who know accounting the 'way it was' !!! A lot of debate and awareness needs to be put in place for this, maybe CIMA can start on this as we have another year or so to go.

 But thankfully, save a few standards - most might see little or no change to existing practices, which is a good thing :O)  

Accounting Standard Study Group

Completely agree with you about the potential confusion this might cause in the initial few years!

We formed an accounting standard study group in 2009, and last year we published the simplified study of eight standards.

We are continuing the project commencing with the study of few selected new standards. There are 8 SLFRSs and 41 LKASs in issue currently.