Page 94 - CA Sri Lanka Integrated Annual Report 2023

NOTES TO THE FINANCIAL STATEMENTS

currently enforceable legal right to a) the Institute has transferred Payments of Principal and Interest (SPPI)
offset the recognised amounts and substantially all the risks and rewards test and evaluating the historical data. As of
there is an intention to settle on a of the asset, or 1st January 2018, the Institute has elected
net basis, to realise the assets and the business model of hold to collect the
settle the liabilities simultaneously. b) the Institute has neither transferred contractual cash flows and measured the
nor retained substantially all the risks instruments at amortized cost.
The financial assets of the Institute include and rewards of the asset but has
receivables, loans and advances to staff, transferred control of the asset. Financial assets are not reclassified
fixed deposits held to collect contractual subsequent to their initial recognition, except
cash flows, government securities, When the Institute has transferred its rights and only in those rare circumstances when
repurchase agreements and cash and cash to receive cash flows from an asset or has the Institute changes its objective of the
equivalents. entered into a pass- through arrangement, business model for managing such financial
it evaluates if, and to what extent, it has assets.
The Institute’s financial assets are retained the risks and rewards of ownership.
subsequently measured at amortised cost When it has neither transferred nor retained Consequent to the change in the business
upon satisfaction of both of the following substantially all of the risks and rewards model, if any, the Institute reclassifies all
conditions: of the asset, nor transferred control of the affected assets prospectively from the
asset, the Institute continues to recognise first day of the next reporting period (the
a) The financial assets are held within the transferred asset to the extent of its reclassification date). Prior periods are not
a business model with the objective continuing involvement. In that case, the restated.
to hold financial assets in order to Institute also recognizes an associated
collect contractual cash flows and liability. The transferred asset and the 2.1.11 Financial Liabilities
associated liability are measured on a basis All financial liabilities are measured at
b) The contractual terms of the financial that reflects the rights and obligations that amortised cost, except for financial liabilities
assets give rise on specified dates to the Institute has retained. at fair value through profit or loss. The
cash flows that are solely payments Institute does not have financial liabilities
of principal and interest on the Continuing involvement that takes the form other than payables for the year ended 31st
principal amount outstanding. of a guarantee over the transferred asset
December 2023.
is measured at the lower of the original
Accordingly, financial assets at amortised carrying amount of the asset and the 2.1.12 Cash and Cash Equivalents
cost are subsequently measured using maximum amount of consideration that the
the effective interest (EIR) method and are Institute could be required to repay. The Institute considers cash in hand as
subject to impairment. Gains and losses are amounts due from banks and short-term
recognised in profit or loss when the asset is 2.1.9 Impairment of Financial Assets deposits with an original maturity of three
derecognised, modified or impaired. months or less to be “Cash and cash
The Institute recognizes an allowance for equivalents”.
2.1.8 Derecognition of Financial expected credit losses (ECLs) for all debt
Assets instruments measured at amortized cost. Cash and cash equivalents comprise cash
in hand, cash at bank, deposits at bank and
A financial asset (or, where applicable, a ECLs are based on the difference between
part of a financial asset or part of a group the contractual cash flows due in accordance repurchase agreements.
of similar financial assets) is primarily with the contract and all the cash flows that Bank overdraft is included as a component of
derecognised when: the Institute expects to receive, discounted cash and cash equivalents for the purpose of
at an approximation of the original effective the statement of cash flows, which has been
h The rights to receive cash flows from interest rate. The expected cash flows will prepared using the ‘indirect method’.
the asset have expired; or include cash flows from the sale of collateral
held or other credit enhancements that are 2.2 Liabilities and Provisions
h The Institute has transferred its integral to the contractual terms.
rights to receive cash flows from the A liability is classified as current when it
asset or has assumed an obligation For trade receivables, the Institute applies a is expected to be settled in the normal
to pay the received cash flows in full simplified approach in calculating ECLs. operating cycle; held primarily for the
without material delay to a third party purpose of trading, it is due to be settled
under a ‘pass-through’ arrangement 2.1.10 Reclassification within twelve months after the reporting
and either: period or there is no unconditional right
Financial assets are measured at amortised to defer the settlement of the liability for
cost as the management intends to hold at least twelve months after the reporting
these instruments to collect the contractual period. The Institute classifies all other
cash flows upon completion of the Solely liabilities as non-current.

92 CA Sri Lanka Integrated Annual Report 2023