SLAASMB Flags Persistent Gaps in Financial Reporting Quality 📉

The Sri Lanka Accounting and Auditing Standards Monitoring Board (SLAASMB) 2024 Regulatory Activity Report highlights ongoing weaknesses in financial reporting across the economy. • Nearly half of the reports reviewed require improvement: Of 388 financial statements from 381 economically significant enterprises (SBEs), 49% were not fully compliant with Sri Lanka Accounting Standards (LKAS). • Compliance issues spanned several core areas: • Incomplete risk disclosures, including inadequate maturity analyses of financial liabilities. • Weak impairment assessments (SLFRS 9/LKAS 36) and insufficient details on valuation techniques and fair value hierarchy. • Missing or insufficient disclosures on tax reconciliations, related-party transactions, and depreciation policies. • The review coverage increased sharply to 388 statements in 2024 (from 261 in 2023), with approximately 62% from regulated entities. • Audit oversight noted: The SLAASMB inspected 22 audits (up from 16), finding that 3 required improvements due to deficiencies in areas like audit planning, risk assessment, and evidence gathering for revenue/inventory. • Submission trend: Filing rates for annual reports are recovering, with 1,517 SBEs submitting statements in 2024 (vs. 1,194 in 2020). The regulator stressed that these recurring disclosure and measurement omissions directly affect the reliability of financial statements.