SRI LANKA FINANCIAL REPORTING STANDARDS AND SRI LANKA ACCOUNTING STANDARDS

Sri Lanka Accounting Standards (SLAS): 

SLAS were the accounting standards used in Sri Lanka before the shift towards convergence with IFRS. These standards were prepared by the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) and were primarily designed to address the specific demands and regulatory requirements of Sri Lanka. SLAS provides recommendations on several accounting areas, providing consistency and reliability in financial reporting within the country (Accounting standards, 2024)

Sri Lanka Financial Reporting rules (LKAS): 

LKAS represents the new set of accounting rules that fit more closely with IFRS. The shift to LKAS indicates Sri Lanka's adherence to international best standards in financial reporting. LKAS is aimed to improve the quality and comparability of financial statements, making them more relevant and understandable for both local and international stakeholders. These standards are designed based on the framework of IFRS, with required adjustments to suit the local environment (Accounting standards, 2024)

Key Differences and Similarities: 

While SLAS was adapted to the specific legislative and economic environment of Sri Lanka, LKAS integrates global best practices and standards defined by the IFRS Foundation. The shift from SLAS to LKAS entails a process of convergence to ensure consistency with international standards. This alignment allows Sri Lanka to increase the credibility of its financial reporting, attract foreign investment, and facilitate international business transactions.

Benefits of Transition: 

The adoption of LKAS delivers various benefits to Sri Lanka's financial reporting landscape. It enhances the comparability of financial accounts with those of other nations that adopt IFRS, permitting a more accurate assessment of Sri Lanka's economic performance on the global arena. Additionally, the convergence promotes the transparency and reliability of financial information, establishing greater confidence in investors, creditors, and other stakeholders.

Institutional Involvement: 

The transition from SLAS to LKAS is often managed by regulatory bodies and professional accounting organizations in Sri Lanka, notably the Securities and Exchange Commission of Sri Lanka (SEC) and CA Sri Lanka. These institutions play a significant role in ensuring a seamless transition, giving advise to businesses, and increasing awareness and education on the new accounting rules.

In essence, the switch from SLAS to LKAS in Sri Lanka marks a deliberate movement towards aligning the country's accounting rules with worldwide best practices, particularly those stated in IFRS. This shift intends to strengthen the quality, comparability, and transparency of financial reporting in Sri Lanka, contributing to the country's integration into the international financial community. For the latest updates and precise data on Sri Lanka's financial reporting standards, it is important to examine the most recent publications and announcements from key regulatory authorities and professional accounting bodies.