CA Sri Lanka to implement new Audit Report from March 2018

Nov 17, 2016 (LBO) – Institute of Chartered Accountants of Sri Lanka is to implement the new Audit Report from March 2018, in keeping with its continuing efforts to ensure the country is in line with international standards.

The new Audit Report by the International Auditing and Assurance Standards Board (IAASB) of International Federation of Accountants (IFAC) has been designed to enhance auditor’s reports for investors and other users of financial statements.

Following the recommendations on Sri Lankan Auditing Standards Committee to the CA Sri Lanka Council to adopt those changes, a decision was taken to make effective the new and revised auditing standards effective for audits of financial statements for periods ending on or after March 31, 2018.

The new international audit related reporting standards was released following several years of development.

This applies to audits of complete sets of general purpose financial statements of listed entities.

President of CA Sri Lanka, Lasantha Wickremasinghe said that the new and improved Auditor’s Report will enhance transparency in the field of financial reporting.

He said that the changes will substantively change the auditors’ reporting and there would be anticipated benefits.

“There will be many benefits, such as enhanced communication, information value, user confidence, transparency, audit quality and increased attention by management and financial statement preparers,” Wickremasinghe said.

“Renewed auditor focus on matters to be reported will result in an increase in professional skepticism which means the improved auditor’s report will enhance the transparency in financial reporting as a whole.”

One of the key enhancements in the new requirement for auditors of financial statements of the listed entities to communicate is the “Key Audit Matters (KAM)”.

KAM are that the auditor views as most significant, with an explanation of how they were addressed in the audit and this change adds more transparency in the auditor’s report about the auditor’s work.

With the new and revised auditing standards coming into effect, CA Sri Lanka will be conducting a series of awareness programmes amidst stakeholders, to help educate them on the latest changes, and ensure they are aware of the new standards that is coming into effect both at a local and global level.

The Audit Faculty of CA Sri Lanka has launched a series of awareness programmes over the past few months, targeting practicing members, finance executives.

Another programme has also been organized targeting board of directors including audit committee members, to promote and educate them on these standards and facilitate their effective implementation in order to achieve the enhanced transparency in financial reporting.