Session 1 Global & Regional Trends

and Development Impacting SMPs

SAFA-IFAC Regional SMP Forum

Jagath Perera (CA Sri Lanka)10th October 2014

Hotel Le-Meridien, New Delhi

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• Sri Lanka Accounting Standards 2014 BV is in line with IFRS 2014 BV.

• Statement of Recommended best practice• Merger Accounting for Common Control Combinations • Not-for-Profit Organisations

• Statement of Alternate Practice (SoATs) are effective in in Sri Lanka

• Right-to-use of Land on Lease• Revaluation option for SMEs

• SLFRS for SMEs

• SLFRS for Smaller Enterprises (ED)

IFRS Convergence and Sri Lanka

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• 2009 Edition of the IFAC Hand Book • 36 clarified ISAs including SLSQC 1

• 2012 Edition of the IFAC Hand Book

• Additions adopted

• 2013 Edition of the IFAC Hand Book • To be adopted

ISAs and Sri Lanka

5

Practices in Sri Lanka

81%

16%

2% 1%

SMP’s in Sri Lanka

Sole Practitioner2 - 56 - 10> 10

Challenges Faced by SME’s

• Pressure to lower prices of products and services

• Compliance with regulation

• Competition

• Lack of Demand for their products and services

• Rising costs

• Economic uncertainty

• Attracting and retaining staff

• Difficulties accessing finance

•

Challenges Faced by SMP’s

• Keeping up with new regulations and standards

• Attracting and retaining clients

• Pressure to lower fees

• Attracting and retaining staff

• Ability to adapt to changing client needs

• Competition

• Rising costs

• Work-life balance

• Keeping up with new technology

•

Characteristics of SMPs in Sri Lanka

• Traditional – mainly to audit and tax

• No formal management structure & small

• Concentrated in Western Province of Sri Lanka

• More reliance on manual processes

• Less access to resources and tools

• Happy to work within the comfort zone

Meeting the Challenges

• Leveraging technology (Improving efficiency)

• More Awareness among SMPs

• Enhance the range of services

• Learning and development

•

Road Map for SMPs in Sri Lanka

•Capacity Building

•Continuity of Practice

•Creating Synergy

• Training – Audit tool kit is developed and Conducted awareness session– TTT Completed– Training in Progress

• Best Practice Guidelines – Developing checklists, industry analysis, LOB guidelines

• New Members in Practice – Orientation programmes

• Networking Events – Events for experienced members in practice

Capacity Building

• Practice Management Guidelines

• Quality Assurance Guidelines

• Guidance on New Opportunities

• Reduce Harmful Competition

• Enhancing Support Services

Continuity of Practice

• Technical Teams - Bridging the resource gaps- Emerging services

• Positioning of the Members in Practice

• Additional Support for the Members in Practice within Regions

Creating Synergy

SMP Firm in 2020 • Equipped for new challenges– HR, Technology

• Less Dependence on assurance

• Specialized services to SMEs

• Geared up to face regulatory pressure

Conclusion

• Need to explore new opportunities to encourage SMPs to move away from comfort zone

• Enhance the market knowledge of value of audit • Assist to minimize the regulatory burden • Centralize training to keep up with new

developments • Require assistance of professional body due to

limited in-house resources

CSR Coordinator

● To be responsible for updating CSR checklist ● To coordinate with the CSR panel of markers and ensure timeliness and

quality of delivery● To report to the Committee the CSR results giving the necessary justificationsCG Coordinator

● To be responsible for updating CG checklist ● To coordinate with the CG panel of markers and ensure timeliness and quality

of delivery● To report to the Committee the CG results giving the necessary justifications

MC Coordinator

● To be responsible for updating MC checklist ● To coordinate with the MC panel of markers and ensure timeliness and quality

of delivery● To report to the Committee the MC results giving the necessary justifications

Key Responsibilities – CSR, CG and MC Coordinator

Thank You