The Sunday Leader

Universal accounting lingo

With Sri Lanka moving towards compliance to International Financial Reporting Standards (I.F.R.S.) by 2011, two of the country’s leading accountancy bodies collaborated in a C.F.O. Breakfast Meeting to create a better understanding of the challenges and solutions in readying comparative financial statements by next year.
A.C.C.A. Sri Lanka President Nandika Buddhipala mentioned at the beginning of the meeting, “Speaking of a common language in accounting to disseminate complex financial results of business entities has become imperative, essential, widely accepted and a long felt need in a heavily interconnected world.  However, the complexity of implementing the common language in accounting, ‘I.F.R.S’, has always been a challenging task across various nations with their diverse cultural, political, management, legal, economic, tax, regulatory and IT differences. This task has become even more challenging with the global financial meltdown spread across the world, again due to close inter-connection of trading and economic activities of nations.”
Get Through Guides (G.T.G.) C.E.O. Ms. Vandana Saxena Poria (O.B.E.) presented the “Challenges in Implementing I.F.R.S.”
“As Sri Lanka is moving to I.F.R.S. from 2011, this means that comparative financial statements will need to be ready by next year (2010),” she told C.F.O.s at the breakfast meeting organised by the Association of Chartered Certified Accountants Sri Lanka and the Institute of Chartered Accountants of Sri Lanka.
“There are misunderstandings on how different I.F.R.S. is to local G.A.A.P. and many people believe the conversion will only affect the finance function.  The aim of this meeting is to share our learning experiences from the European conversions to I.F.R.S. performed in 2005 and to help Sri Lankan companies benefit from the lessons learnt.”
Vandana, a U.K. qualified Chartered Accountant was conferred the O.B.E. for services to British Trade, Investment and Education in 2008.
Her post qualification experience includes 10 years in Central and Eastern Europe and becoming B.P.P. International C.E.O., the international division of Europe’s largest listed professional training company with a turnover in excess Great Britain Pounds (G.B.P.)160 million, where she drafted I.F.R.S.’ first versions and I.S.A. material for B.P.P.
A number of factors are intertwined in the process towards I.F.R.S. compliance, from I.T. systems to data analysis and business managers being made aware of how I.F.R.S. will affect decision making.
I.C.A.S.L. President Nishan Fernando said, “This might be a very vital initiative because in this part of the world is currently in the process of moving towards a single set of global accounting standards. As the forces of globalization prompt more and more countries to open their doors to foreign investment and as businesses themselves expand across borders, both the public and private sectors are increasingly recognizing the benefits of having a commonly understood financial reporting framework supported by strong globally accepted standards.”
However arriving at a uniform set of financial reporting standards globally, is not quite easy as its sounds. Experience from other countries has shown that not only can financial statements be impacted significantly by the I.F.R.S.  transition. but this change process needs to be well planned to ensure costs and resources are not strained.
The post breakfast meeting panel discussion with J.K.H. Group Finance Director Ronnie Peiris, Ernst & Young, K.P.M.G. and P.W.C. Partners Asite Talwatte, Reyaz Mihular and Sujeewa Mudalige respectively, also discussed the convergence of national and international standards which have increased significantly as globalisation increases.

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