Sunday Times Business Pages
It has been reported that Sri Lanka Financial Reporting Standards (SLFRS) 10, 11 and 12 will be implemented, as much earlier agreed, from January 2014. These provisions relate to ‘consolidation of group accounts’ and ‘disclosure of interests in other entities’ to fall more in line with International Financial Reporting Standards (IFRS). As disgustingly usual, lobbying and pressure is being exerted to delay or defer its implementation. However, Sujeewa Rajapakse, the President of CA Sri Lanka, has not wilted under such undue pressure, and has firmly stated that… “Sri Lankan companies were well aware of these forthcoming standards when they adopted IFRS in 2012”. He also said (reportedly) that, “CA Sri Lanka had been providing the support and the guidance to facilitate smooth transition”
In 2010, at a chartered accountants conference, I was constrained to note that it was a shame that the Auditing and Accounting Professionals of SriLanka, had not been able to adopt IFRS whereas 102 other countries had already complied. We have some of the best accounting talent, outside of the most advanced and developed countries. It was the sheepish mentality of the auditing fraternity of Sri Lanka, that many conglomerates (which siphon off profits, spin off assets to subsidiaries, associates and/or related parties of Controlling Interests; charge unconscionably high management fees, directors remuneration and perks, etc), are able to strongly influence the framing or changing of rules, regulations; definitions and codes. These relate to Good Corporate Governance (GCG), appointments of ‘independent’ auditors, advisers/valuers, as well as of ‘Independent’ Directors and Company Secretaries.
They resisted the implementation of Sri Lanka FRS for two years until January 2012 and it appears some succeeded in obtaining special waivers/deferment until January 2013, and of some provisions until 2015!.
It was evident that Mr. Rajapakse wanted throughout to build up a good reputation for the profession by maintaining high standards. He spoke at the panel discussion, organized by the European Chamber of Commerce of Sri Lanka (ECCSL) on ‘ Capital Markets and Good Governance’ at which both of us were among six panellists representing different stakeholders.
It is sad that a few past presidents, from other large international audit practices have faltered and failed miserably to uphold required standards of and the good name of CA Sri Lanka. The World Bank saw the need to improve and gave funds to get its act together. It is therefore heartening to note that Mr. Rajapakse of CA Sri Lanka is standing firm in the interest of good governance, transparency and accountability which are absolutely essential to boost investor confidence in Sri Lanka. Ensuring these good values was the hallmark of Lionel Arthur Weerasinghe the first President of this then prestigious body. He was also the Auditor General of Sri Lanka, who would obtain reimbursement, from even Cabinet Ministers and high ranking public officials who misused public funds. When will the profession reclaim that high position of public trust?
Chance to partially commend the SEC!
My Article “Justice for depositors of CIFL and Touchwood” which appeared in the Business Times on Sunday of 15th September gave due publicity in the national interest to the woes tribulations and dilemma of the stranded investors/depositors/shareholders.
The Securities and Exchange Commission (SEC) action on Touchwood, (perhaps due to some good advice from independent members of the commission and good lawyers) was partially satisfactory.
The SEC rightly opposed the winding up action in courts, but erroneously lifted the suspension of trading without latest positions of assets, liabilities and staggered cash flow being made known to the shareholders and the investing public. They have also apparently failed to note the firm assurances given at the AGM by the protem Chairman/CEO and the Board, of Rs.200 million being brought in immediately, and another US$21million within three to six months, both as, interest free deposits, to assure safety of shareholders/investors. Many shareholders insisted that the Company Secretaries write the minutes accurately. It has been reported that there have been 13 exits or entries to the Board upto now.
Continuing Saga of Errors of CB interventions and directions:
The Central Bank (CB) acted erroneously in respect of directions to CIFL. The latter was restrained by Courts from acting on CB’s two Directions – a) to convert 60% of Public Deposits to ‘non-voting shares’! (why non-voting?). b) to refrain from paying monies on 5% of non-voting shares.
Apparently this seems an ill disguised carrot dangled at poor desperate depositors to covert to the voiceless, powerless non-voting shares. The price at which shares will be offered is not clear either. No credit to the CB. It is heartening that eminent President’s Counsel Faiz Mustapha is appearing for beleaguered stakeholders. The national interest and the investing public must be safeguarded by an ever vigilant, caring exemplary judiciary and the very credible, independent media.
Good Governance activist