Accounting Standards

Sri Lanka has converged with the latest pronouncements issued by International Accounting Standards Board (IASB), since 01 January 2012.

The objectives of the standard setting process are,

• To develop, in the public interest a set of high quality, understandable and enforceable accounting standards that require high quality, transparent and comparable information in financial statements and other financial reporting to help users of the information to make economic decisions:
• To promote the use and rigorous application of those standards;
• In fulfilling the objectives associated with (a) and (b), to take account of, as appropriate, the special needs of small and medium-sized entities
• To bring about convergence of Sri Lanka Accounting Standards and International Financial Reporting Standards (IFRSs) to produce high quality solutions.

In order to achieve the above objectives the Council of the Institute of Chartered Accountants of Sri Lanka adopts the International Financial Reporting Standards issued by International Accounting Standards Board (IASB).

The Sri Lanka Accounting and Auditing Standards Act, No. 15 of 1995 authorises the Council of the Institute of Chartered Accountants of Sri Lanka to adopt Sri Lanka Accounting Standards and requires “Specified Business Enterprises” to prepare and present their financial statements in compliance with Sri Lanka Accounting Standards.

Sri Lanka Accounting Standards comprise Accounting Standards prefixed both SLFRS and LKAS. SLFRS refers to Sri Lanka Accounting Standards corresponding to IFRS and LKAS are Sri Lanka Accounting Standards corresponding to IAS. Sri Lanka Accounting Standards are commonly referred by the term of SLFRSs. In addition, upon the recommendation of the Accounting Standards Committee, the Council of the Institute of Chartered Accountants of Sri Lanka has adopted all IFRIC and SIC pronouncements, issued by IASB. Sri Lanka Accounting Standards further comprises of Statements of Recommended Practices (SoRPs), Statement of Alternate Treatment (SoATs) and Financial Reporting Guidelines issued by the Institute.

In addition to full SLFRSs/LKASs, the Accounting Standards Committee has recommended to adopt Sri Lanka Accounting Standard for Small and Medium Sized Entities (SLFRS for SMEs) and Sri Lanka Accounting Standards for Smaller Entities (SLFRS for Smaller Entities) in order to further reduce the financial reporting burden for the SMEs in the country.