Institute of Chartered Accountants of Sri Lanka

The Sri Lanka Accounting and Auditing Standards Monitoring Board (SLAASMB) is responsible for monitoring compliance with applicable auditing standards and conducting inspections of audits of specified business enterprises. In parallel, the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) is responsible for establishing and implementing a quality assurance (QA) review system for its members.

CA Sri Lanka has established a QA review framework, including governance arrangements through an Audit Quality Assurance Board, to oversee QA-related activities. The institute has undertaken initiatives to support audit quality, including providing guidance materials and training to assist firms in implementing quality management standards.

However, the QA review system operated by CA Sri Lanka is not fully aligned with the requirements of SMO 1. In particular, the QA review program has historically operated on a voluntary basis and does not demonstrate a comprehensive and mandatory system covering all audits with an established review cycle.

While elements of audit oversight and QA review exist through the combined activities of CA Sri Lanka and the SLAASMB, further enhancements are needed to establish a fully operational QA system that meets the requirements of SMO 1. Accordingly, CA Sri Lanka is assessed as being at the Review & Improve stage with respect to SMO 1.

Current Status: Review & Improve

The Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) is responsible for establishing initial professional development (IPD) and continuing professional development (CPD) requirements for Chartered Accountants in Sri Lanka. The institute administers a comprehensive professional education program that includes formal education, practical experience requirements, and final assessments.

CA Sri Lanka maintains processes to review and update its education and training programs to align with the International Education Standards (IES) and evolving professional requirements. The institute has implemented a structured CPD framework with mandatory requirements for members, including specific requirements for practicing members, and monitors compliance through established tracking and enforcement mechanisms.

To support ongoing professional development, CA Sri Lanka provides a wide range of learning opportunities, including seminars, training programs, and digital learning platforms. The institute also engages with educators, training providers, and examiners to ensure the consistent application of education standards and to maintain the quality of its qualification program.

CA Sri Lanka incorporates ethics and other technical standards into its education and training programs and promotes the development of professional and business skills among its members. The institute also supports small and medium-sized practices through targeted learning initiatives and contributes to the international standard-setting process through engagement with exposure drafts issued by relevant bodies.

Through these established processes and ongoing activities, CA Sri Lanka maintains an education and training system aligned with the objectives of the International Education Standards.

Current Status: Sustain

Under the Sri Lanka Accounting and Auditing Standards Act No. 15 of 1995, the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) is responsible for the adoption and implementation of auditing standards in Sri Lanka.

CA Sri Lanka establishes Sri Lanka Auditing Standards (SLAuS), which are based on International Standards on Auditing (ISA) issued by the International Auditing and Assurance Standards Board and are applied in the conduct of statutory audits. CA Sri Lanka reports that it has adopted the 2024 edition of the IAASB Handbook, reflecting the latest ISA in effect as of the time of the assessment, and is in the process of adopting the 2025 Handbook.

The institute has established robust and ongoing processes to monitor developments in IAASB pronouncements, including exposure drafts and new or revised standards, and to incorporate updates into the national framework through due process, including stakeholder consultation.

CA Sri Lanka supports the consistent implementation of auditing standards through the dissemination of standards and guidance materials, technical support, and a comprehensive program of education and training for its members. The institute also engages with stakeholders and promotes awareness of new and revised standards to facilitate timely and effective application in practice.

Through these established and ongoing activities, CA Sri Lanka demonstrates sustained commitment to maintaining alignment with ISA and supporting high-quality audit practices in the jurisdiction.

Current Status: Sustain

The Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) is responsible for establishing ethical requirements for its members and has adopted a Code of Ethics applicable to its membership. CA Sri Lanka reports that it has adopted the 2024 edition of the International Code of Ethics for Professional Accountants (including International Independence Standards), reflecting the latest version of the Code in effect as of the time of the assessment.

CA Sri Lanka incorporates ethical principles into its initial professional development (IPD) program and requires members to comply with ethical requirements as part of their professional obligations. The institute supports continuing professional development (CPD) in ethics through seminars, training programs, and technical guidance to enhance members’ understanding and application of ethical standards.

The institute has established ongoing processes to monitor developments in the IESBA Code, including exposure drafts and new or revised pronouncements, and to incorporate updates into its ethical framework. CA Sri Lanka promotes awareness of ethical requirements through publications, guidance materials, and communication channels, and participates in the international standard-setting process by reviewing and responding to exposure drafts issued by the International Ethics Standards Board for Accountants.

Through these established and ongoing activities, CA Sri Lanka demonstrates sustained commitment to maintaining alignment with the IESBA Code and promoting high ethical standards within the profession.

Current Status: Sustain

The Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka), in partnership with the Ministry of Finance, is responsible for the development and adoption of public sector accounting standards in Sri Lanka. Public sector accounting standards are issued as Sri Lanka Public Sector Accounting Standards (SLPSAS), which are based on International Public Sector Accounting Standards issued by the International Public Sector Accounting Standards Board.

CA Sri Lanka has established institutional arrangements, including a Public Sector Accounting Standards Committee, to support the development, adoption, and implementation of public sector accounting standards. The institute contributes to the standard-setting process, facilitates translation of standards, and supports stakeholder engagement.

A number of IPSAS have been adopted and incorporated into SLPSAS, with modifications to reflect national requirements. CA Sri Lanka also supports implementation through training programs, professional education initiatives, and capacity-building efforts, including the development of public sector-focused qualifications and continuing professional development activities.

However, the public sector accounting standards framework in Sri Lanka is not fully aligned with the complete suite of IPSAS as issued. Differences remain due to modifications and the phased approach to adoption.

Given CA Sri Lanka’s joint responsibility for standard-setting in this area, further efforts are needed to achieve full alignment with IPSAS as issued. Accordingly, CA Sri Lanka is assessed as being at the Review & Improve stage with respect to SMO 5.

CA Sri Lanka is encouraged to continue advancing its adoption strategy by establishing a clear roadmap toward full adoption of IPSAS as issued, with minimal or no modifications, and to ensure timely incorporation of new and revised standards issued by the IPSASB.

Current Status: Review & Improve

The Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) is responsible for establishing and operating an investigative and disciplinary (I&D) system for its members. The system is set out in the institute’s governing legislation and regulations and is operational.

CA Sri Lanka has established formal procedures to address complaints and allegations of misconduct. Complaints are reviewed and investigated through a structured process, including consideration by a Professional Conduct (Ethics) Committee. Where appropriate, cases are referred for disciplinary action, with decisions and sanctions subject to defined governance and approval processes.

The institute has mechanisms in place to process cases, apply sanctions, and ensure due process. CA Sri Lanka also promotes awareness of its I&D system through publication of procedures and communication with members.

In addition, auditors of specified business enterprises are subject to oversight by the Sri Lanka Accounting and Auditing Standards Monitoring Board (SLAASMB), which has investigative and enforcement powers under the relevant legislation. This contributes to the overall effectiveness of the investigative and disciplinary framework in the jurisdiction.

Based on available information, CA Sri Lanka’s investigative and disciplinary system is aligned with the requirements of SMO 6 and is operating effectively. Accordingly, CA Sri Lanka is assessed as being at the Sustain stage with respect to SMO 6.

Current Status: Sustain

Under the Accounting and Auditing Standards Act No. 15 of 1995, the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) is responsible for the adoption and implementation of accounting standards in Sri Lanka. Financial reporting standards are issued as Sri Lanka Financial Reporting Standards (SLFRS), which are based on International Financial Reporting Standards issued by the International Accounting Standards Board. Sri Lanka has also adopted SLFRS for Small- and Medium-sized Entities, based on the IFRS for SMEs.

CA Sri Lanka has established robust processes to support the adoption and implementation of financial reporting standards. These include mechanisms for reviewing and incorporating new and revised IFRS, stakeholder consultation, translation of standards into local languages, and dissemination of updates to members and stakeholders. The institute also supports implementation through technical committees, guidance materials, training programs, and continuing professional development activities.

CA Sri Lanka actively promotes engagement with the international standard-setting process by publishing exposure drafts and facilitating stakeholder input. It also provides implementation support through technical resources and forums to address practical application issues.

However, financial reporting standards in Sri Lanka are not fully aligned with IFRS as issued at all times. Differences may arise due to the timing of adoption of new and revised standards and the use of national standards based on IFRS.

Given CA Sri Lanka’s direct responsibility for the adoption of accounting standards, further efforts are needed to ensure full and timely alignment with IFRS as issued. Accordingly, CA Sri Lanka is assessed as being at the Review & Improve stage with respect to SMO 7.

CA Sri Lanka is strongly encouraged to establish and implement a clear and timely convergence process to ensure that SLFRS are fully aligned with IFRS as issued by the International Accounting Standards Board, with minimal or no modifications, and that new and revised standards are adopted without delay.

Current Status: Review & Improve