Lankan accountants also perform public interest role, expert says
View(s):The accountancy profession is differentiated from other professions as it has a public interest role, was the view of a top practising accountant.
Reyaz Mihular, Managing Partner, KPMG expressed this view while participating at a ‘Round Table Discussion on Proposed Amendments and Emerging Issues for Small and Medium Enterprises’ held at the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) auditorium, last week.
Accountants take on public interest as part of their responsibility.
The discussion centered on proposals in the ‘Exposure Draft Proposed amendments to the International Financial Reporting Standards for Small and Medium sized Entities (IFRS for SMEs)’ and a presentation on the subject was made by Sanath Fernando, Partner, Ernst & Young and Member, Implementation Group of IFRS for SMEs.
Mr. Fernando said that this ‘Standard’ is aimed at millions of companies – around 99 per cent. The 52 largest stock exchanges in the world together have about 45,000 listed companies, he pointed out and said that Europe has roughly 28 million private sector enterprises (SMEs) ; USA has about 20 million; UK: 4.7 million (99.6 per cent under 100 employees); Hong Kong: 750,000 ; Brazil: 6 million and Malaysia: 1.8 million.
He said that SMEs in 80 jurisdictions in the world and more are using IFRS and in Sri Lanka IFRS is aimed at about 53,000 companies but among them only about 300 are listed companies. Mr. Fernando pointed out that a large part of Sri Lanka’s economy around 80 per cent, is SMEs and they need to adopt LKAS/SLFRS by SLAAS Act.
The adoption of SLFRS for SMEs is needed for them to stand alone with SLFRS, he pointed out as they are tailor made for them. He said that the users need information about cash flows, liquidity and solvency.
Disclosure is simplified and there is a big reduction in disclosures, he revealed. He said that the full SLFRSs contained more than 3,000 items in the disclosure checklist which is now reduced to roughly 300 disclosures.
With regard to income taxes, Mr. Fernando said the ‘Standard’ uses a simpler approach and the tax base of an asset is determined by the tax consequences. He said that the tax base of a liability is determined by the tax consequences that would arise if it were settled for its carrying amount at the reporting date.
He told the participants that specific responses are required on better quality reporting; tailored for the capabilities and needs of SME; when SMEs aspire to become big, sound financials are a must; if capital providers understand and have confidence in the financial figures, an SME’s ability to obtain the capital it needs improves. Ultimately, the economy in which it operates improves and enhances consistency in audit quality.
The other panellists were: Tishan Subasinghe, Partner, BDO Partners; Indika Ranaweera, Assistant Vice President, SME and Micro Finance, NDB Bank and Gamini Uduwara Arachchi, Partner, Uduwara Arachchi Associates.
Arjuna Herath, President, CASL introduced the sessions.
(QP)