Assignment March 2019

Please refer below for CSE and CA Sectors

Last year Sector Winners

https://drive.google.com/file/d/16axWtzXQLKnnmEZIvO-QYlSV8jN0AnJ_/view?usp=sharing

Overall Winners
Hayleys
JKH
Com Bank

refer below to access CSE sectors and respective companies under different sectors..

https://www.cse.lk/home/CSESectors

Admin wrote:

refer below to access CSE sectors and respective companies under different sectors..

https://www.cse.lk/home/CSESectors

A report that may be useful publised by ICAEW..

https://www.icaew.com/-/media/corporate/files/technical/financial-reporting/information-for-better-markets/ifbm/developments-in-new-reporting-models.ashx


Survey published by KPMG in 2014
https://assets.kpmg/content/dam/kpmg/pdf/2014/06/kpmg-survey-business-reporting.pdf

Presentation by Raditha

https://drive.google.com/file/d/0B3yovuFmVsGqZGt2LVo4QzUzMFVYcjZYVEpFRTdoeWl6NDh3/view?usp=sharing

Sir, what are the additional contents should be included in the report other than mentioned in the questions?

Two resource persons who won gold for their annual reports will join us tomorrow to discuss about best practices they adopted.

One resource person making a presentation would like you to go through below when you come to the class.

Please refer below:

https://cdn.cse.lk/cmt/upload_report_file/364_1551955949121.5%20MB.pdf

Suggest to go through;
•         About this report in page 6-8
•         Business model 10-11
•         Report structure – page 9
•         Provided technical review of new SLFRS 9,IFRS 17, and SLFRS 16 – pages 438 – 455 – New accounting developments

Future of Reporting-Some areas to consider

https://www.accountancyeurope.eu/wp-content/uploads/FEECogitoPaper_-_FutureofCorporateReporting.pdf

https://www.icaew.com/-/media/corporate/archive/files/technical/financial-reporting/information-for-better-markets/whats-next-for-corporate-reporting.ashx

Session today:

Presentation by Nuwan
https://drive.google.com/file/d/1Ed6M9mX4o6T5R5RP2Q6yAeoc7zOCbjoM/view?usp=sharing

Knowledge in Integrated Reporting
https://drive.google.com/file/d/10NXdwJvwYKoWeX65fdYrJg8-v6hG63HF/view?usp=sharing

Report Structure- Guide Only
https://drive.google.com/file/d/1sdlzRpg-vyaoHAVdkLFJulNgX7unVvPB/view?usp=sharing

Integrated Reporting website
http://integratedreporting.org/

http://integratedreporting.org/wp-content/uploads/2018/04/ACCA-Integrated-Reporting-M4V.m4v

Sir, when we select a listed company for assignment, do we need to consider the listed date of that company in CSE ?

Sir.Is it better to select the manufacturing company who don't have integrated reporting?

Dear Sir,

I selected a manufacturing company for the assignment which has established in 1986. I was able to
obtain the annual reports from the F/Y 2011/12 to 2017/18 in Colombo Stock Exchange and other publishers. Is it enough (No of Years) to evaluate the evolution of Financial Reporting Practices ?

Manjula wrote:

Dear Sir,

I selected a manufacturing company for the assignment which has established in 1986. I was able to
obtain the annual reports from the F/Y 2011/12 to 2017/18 in Colombo Stock Exchange and other publishers. Is it enough (No of Years) to evaluate the evolution of Financial Reporting Practices ?

It depends on the level of evolution. If you find enough to write no of years selected might be ok.
However if you dont see much changes YoY, you will not have much to write.

mahesh wrote:

Sir.Is it better to select the manufacturing company who don't have integrated reporting?

You may have enough to write...

ChamaraS wrote:

Sir, when we select a listed company for assignment, do we need to consider the listed date of that company in CSE ?

Not necessary, but enough time to see the evolution..

Sir, is it necessary to apply any models? (such as Porter's 5 forces, SWOT etc)?
Also, complying with the corporate governance code goes as a mandatory requirement I believe (e.g: appointment of an audit committee, remuneration committee etc?)?

aneka wrote:

Sir, is it necessary to apply any models? (such as Porter's 5 forces, SWOT etc)?
Also, complying with the corporate governance code goes as a mandatory requirement I believe (e.g: appointment of an audit committee, remuneration committee etc?)?

Not necessary to apply models for this assignment.

History and Evolution

https://www.linkedin.com/pulse/historical-perspective-development-accounting-jesus-obana-cpa-mba/

https://www.ifrs.org/about-us/who-we-are/#history
https://www.iasplus.com/en/resources/sustainability
https://www.iasplus.com/en/resources/topics
https://www.iasplus.com/en/standards

Corporate financial reporting requirements in Sri Lanka are outlined in several laws, which include the Companies Act No. 7 of 2007, Securities and Exchange Commission Act No. 36 of 1987, Banking Act No. 30 of 1988, Finance Business Act of 2012, Regulation of Insurance Industry Act No. 27 of 2011, Inland Revenue Act No. 9 of 2015, Microfinance Act No. 6 of 2016, Finance Act No. 38 of 1971, and Accounting and Auditing Standards Act No. 15 of 1995.

The Companies Act No. 7 of 2007 establishes financial reporting requirements and audit requirements for companies incorporated under the Act; however, the Act does not specify the applicable standards.

The Accounting and Auditing Standards Act No. 15 of 1995 requires specified business enterprises (SBE) to prepare financial statements in compliance with accounting standards as set by the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka). The institute has adopted the Sri Lanka Accounting Standards (SLFRS). SLFRS are developed based on the 2017 version of the International Financial Reporting Standards (IFRS) Consolidated without Early Adoption, with modifications. CA Sri Lanka has also adopted IFRS for SMEs as SLFRS for SMEs. Furthermore, the amendments to the existing IFRS along with new IFRS are being reviewed and adopted when available. All companies other than SBEs, defined below can apply SLFRS for SMEs.

SBEs in Sri Lanka are defined in the Accounting and Auditing Standards Act as: companies listed on the stock exchange, banks, insurance companies, factoring companies, finance companies, leasing companies, unit trusts, fund management companies, stockbrokers and stock dealers, stock exchanges, public corporations engaged in the sale of goods or the provision of services, and non-listed companies that meet the following criteria: annual turnover in excess of LKR 500 million, shareholders equity in the excess of LKR 100 million, gross assets in excess of LKR 300 million, liabilities to banks and other financial institutions in excess of LKR 100 million, and staff in excess of 1,000 individuals.

The Accounting and Auditing Standards Act No. 15 of 1995 stipulates mandatory audits for all SBEs. The act specifies that only Chartered Accountants (CAs), members of CA Sri Lanka with a Certificate to Practice, are authorized to perform audits following auditing standards as set by CA Sri Lanka. Under the same legislation, CA Sri Lanka is also empowered to set auditing standards in the country and the institute has adopted the Sri Lankan Auditing Standards (SLAuS). SLAuS are developed based on the 2016 version of the International Standards on Auditing with modifications due to local laws.

In addition to financial reporting requirements set in the Accounting and Auditing Standards Act and Companies Act, requirements for certain SBEs are also established under other relevant laws:

The Securities and Exchange Commission Act No. 36 of 1987 establishes financial reporting requirements for companies listed on the stock exchange and recognizes the Securities and Exchange Commission as the regulator for all listed companies.
The Banking Act No. 30 of 1988 stipulates financial reporting requirements for all banks and recognizes the Central Bank of Sri Lanka (CBSL) as the regulator of the banking sector. The CBSL also regulates licensed finance companies, established under the Finance Business Act of 2012, and microfinance companies, created under the Microfinance Act No. 6 of 2016.
The Regulation of Insurance Industry Act No. 27 of 2011 mandates financial reporting requirements for all insurance companies and recognizes the Insurance Board of Sri Lanka as the regulator for insurance companies.
Regulation of Accountancy Profession




https://www.ifac.org/global-knowledge-gateway/business-reporting/discussion/confidence-non-financial-information-next

Assignment Review- Common issues Observed

Executive Summary- Most have written it like an introduction to the assignment. Executive summary ideally should reflect summary points of each section you covered. Summary of evolution,summary of company evolution/evaluation/summary of limitations and recommendations.

Global and Local Evolution- Too much of theory/High weight given reducing weight on high marks last two questions/ Writing too much on recent accounting standards like SLFRS 9/15/Leasing/Insurance etc..
Too many details on Non financial reporting- Eg: Sustainability reporting process/Risk management process

Evolution is about how we have reached to current level of reporting over time. It may cover how accounting standard setting moved over time/for Ex:historical cost Vs FV accounting/ IAS to IFRS/
Inducate timing of these events
Non financial also include the sequence of events and finally about Integrated reporting

Company Evolution: Better to provide a snapshot of evelution over last 8 to 10 years as a table showing how reporting has changed over the period. Then you can write some details under that.
Compare this evolution with county level and global level evolution discussed above (if possible)

Evaluation is about Positives and Negatives. Identify more negatives as you need to give recommendations in the next section. Also evaluation should be on current report an improvements for the future.

Two important references given below to get an idea on evolution of financial reporting- Globally

https://www.ifrs.org/-/media/feature/groups/consultative-groups/fcag/report-of-the-fcag.pdf?la=en


https://www.ifrs.org/about-us/who-we-are/#history