ECONOMYNEXT – Auditors of listed companies should flag breaches of rules or directions to the Sri Lanka Securities and Exchange Commission if listed companies or market intermediaries do not take timely action, newly appointed Chairman Faizal Salieh had said.
Auditors first have to report non-compliance or breach of a rule, law, regulation or regulatory directive under the SEC Act, a fraud or irregularity which has a material impact on the company to the Audit Committee.
In the Audit Committee fails to take action within two weeks, the auditor is required under the Act to inform the Board of Directors. If no action is taken by the Director Board within two weeks, the auditor should red flag it to the SEC.
The internal control environment of companies should also be looked into.
“In order to establish a fair, orderly and transparent capital market it is important that the whole gamut of a company’s governance and risk management structures and processes are rigorously audited,” Salieh was quoted as saying at a meeting with Auditors.
A news SEC Act had classified Auditors as “Supplementary Service Providers” to the SEC and Colombo Stock Exchange.
Auditors are responsible for verifying and assuring the accuracy of financial reports and overall compliance of listed companies, market institutions and intermediaries.
Auditors of Market Intermediaries also have a reporting obligation to the Colombo Stock Exchange Board in the case of a breach or non-compliance of rules.
The CSE should be promptly informed if the auditor is aware of a situation that adversely affects the financial position of a Market Intermediary to a material extent.
The Audit Committee, the Board of Directors should be informed by a written report on a matter affects the financial position of the entity to a material extent.
Any breach of the law, rules or directives, fraud or an irregularity that has or may have a material effect on the accounts of the entity or that of the funds or property of investors in securities should be reported.
Auditors are also obligated to send a copy of such reports to the SEC.
The Sri Lanka Accounting Auditing Standards Monitoring Board was in charge of analyzing accounts of the entities.
Salieh had requested SLASSMB to share any significant findings from their monitoring activities with the SEC’s Supervision Division. (Colombo/ April02/2023)