Page 65 - CA Sri Lanka Integrated Annual Report 2023

Key initiatives undertaken by the CA Sri Lanka Technical Division in 2023
Focus Area Activity
SLFRS 17 One significant development in global accounting standards was the issuance of IFRS 17 – Insurance Contracts
- Insurance by the International Accounting Standards Board (IASB) in May 2017, with subsequent amendments in June 2020.
Contracts CA Sri Lanka proactively engaged in discussions with regulatory bodies and industry stakeholders regarding the
implementation of SLFRS 17. As a result, the council approved a revised effective date of implementation, taking
into account practical challenges faced by preparers, setting it for 1st January 2026.
A survey was conducted to gather information on IFRS 17 Implementation in SAFA countries Singapore, Malaysia,
Hong Kong, Thailand, Indonesia etc. CA Sri Lanka had several meetings with Sri Lanka Insurance Regulatory
Commission and Insurance Associations of Sri Lanka to ensure the road map of implementation of SLFRS-17. By
evaluating the readings of implementation of the standard requirements, the council has approved the deferment
of the mandatory applicable date of the standard to 1st January 2026.
Domestic debt During the year, CA Sri Lanka had to be involved in the domestic debt optimization programme of the country as the
optimization national accounting standards setter. In this process, CA Sri Lanka was invited by the Central Bank of Sri Lanka for the
programme identification of the discounting factor for new financial instruments that the government expected to issue. With the
expertise industry and the accounting standards knowledge, CA Sri Lanka provided guidance to the Central Bank on this
national issue.

Further, FAQs relating to this matter were issued to update the knowledge of the financial professionals in June 2023.
CA Sri Lanka also provided its expertise guidance on the application of the risk-free rate for dollar dominated
instruments resulted from domestic debt restructuring programme.

Superannuation funds also had a significant impact in the application of accounting standards. Therefore, CA Sri Lanka
had provided guidance to the Employees’ Provident Fund (EPF) and Employees’ Trust Fund (ETF) along with issuing
FAQs to clarify the accounting treatment. CA Sri Lanka’s continuous guidance on this process was appreciated by the
Governor of the Central Bank.
LKAS 12 In responsive to evolving tax regulations, CA Sri Lanka provided guidance on accounting for deferred taxes,
Income Tax seeking clarification from the IFRS Foundation and issuing FAQs to aid practitioners and preparers. Similarly, the
Institute addressed concerns regarding significant tax rate changes, emphasizing the adjustment of impacts to the
opening balance of retained earnings.
Sustainability With the issuance of global sustainability disclosure standards by the International Sustainability Standards Board
Standards (ISSB), CA Sri Lanka’s Sustainability Standards Committee focused on planning the implementation of these
standards within the domestic context. Awareness sessions were conducted to educate stakeholders on the
importance of sustainability reporting and the forthcoming standards.

Through these endeavors, CA Sri Lanka continues to play a pivotal role in advancing accounting standards,
fostering international cooperation and promoting transparency and sustainability in corporate reporting practices.
Sri Lanka To maintain the quality aspect of practicing members, Sri Lanka Standards on Quality Management (SLSQM) will
Standards be implemented as per the direction of the council.
on Quality
Management SLSQM 1: Systems of quality management in compliance with SLSQM must be designed and implemented
by January 1, 2025. The evaluation of the Quality Management System, as required by paragraphs 53–54 of
SLSQM, must be performed within one year following January 1, 2025 and SLSQM 2: Audits and reviews of
financial statements for periods beginning on or after January 1, 2025; and Other assurance and related services
engagements beginning on or after January 1, 2025. Further, the effective date for SLAuS 220 (Revised) will be
applicable for audits of financial statements for the period beginning on or after January 1, 2025.
Audit Toolkit During the year, the CA Sri Lanka accelerated the process of development of Audit Toolkit to enhance the audit quality of
small and medium audit practitioners. The objective of this software is to facilitate the enhancement of audit quality and
audit methodology, considering the national demand for better financial reporting. This software is being developed with
IT support from a third party and involvement of five audit firms on voluntarily basis in order to streamline the process
and ensure success.

Currently, the software has been completed to a great extent, but few areas have been identified for further
developments and modifications.

CA Sri Lanka Integrated Annual Report 2023 63