This will ease the comparison of financial reports of local businesses in a global platform, which is key to remaining competitive.
These new Sri Lanka accounting standards continue to be based on substance accounting as opposed to rules based accounting. They imply a greater emphasis on the balance sheet as opposed to the historical emphasis on profit and loss account. The new standards are prefixed as SLFRS corresponding to IFRS, and LKAS corresponding to IAS.
The starting point of convergence will be the application of 'SLFRS 1: first time adoption of Sri Lanka accounting standards', which will ensure companies apply the new standards retrospectively.
However, the impact of convergence is not limited to financial accounting and reporting. It also applies to areas such as financial and tax planning, business development, risk and control. Therefore, senior management commitment for convergence and timely preparation of employee training, system alignment etc will be vital.
CIMA Sri Lanka has therefore revamped the accounting standard study group formed in 2009 (chaired by Manil Jayesinghe, partner of Ernst & Young). The first stage will include the study of the following standards.
Our target audience is CIMA professionals who are not heavily engaged in financial accounting and reporting as part of their daily role. These documents primarily highlight the salient features of each standard and then explore its impact on a typical management accountant. These include areas such as budgeting, costing, pricing, margin analysis and risk management.
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