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CA Sri Lanka launches SME toolkit for 2014

24 Jan 2014 - {{hitsCtrl.values.hits}}

By Channa Fernandopulle
The Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) officially launched its small and medium Enterprise (SME) toolkit for 2014 recently.
The audit manual, which is targeted at Small and Medium Practice (SMP) accounting firms, is compiled by the institute with a view to supporting practitioners in maintaining the quality of the profession in carrying out audits of financial statements.

“Auditing of SMEs is still a very challenging task which most of the SMPs are often involved in. Standards for financial reporting are also becoming more complex. It is with these factors in mind that we issued the SME toolkit thereby enabling practitioners to gain a deeper knowledge of current compliance requirements,” newly appointed CA Sri Lanka President Arjuna Herath stated.

The audit manual contains information and illustrative examples of the Sri Lanka Auditing Standards and practical advice on the audit approach to be adopted by practitioners when undertaking a risk-based audit of an SME.

Herath stated that the toolkit would ultimately help practitioners to conduct high-quality, cost-effective audits enabling them to better serve SMEs and the wider public interest.

“SMEs are an important part of our economy but having accurate financial information is also crucial to the effective operation of any business. Particularly outside the Western Province we see a lot of the economy is SME driven and this could be another area where demand for accounting services is likely to grow,” he added.
In that context, Herath reiterated the institute’s commitment toward development of skills and human resources in order to keep up with the growing demand, with a fresh emphasis on providing education outside of the Western Province.

“It is important that future generations are trained and qualified in the areas that they originate from. There is normally a tendency for students who migrate to Colombo to study accounting to remain in the region once they become qualified.

What is required is for these accountants to take what they have learned and bring it back to their own region in order to fuel the provincial economy and thereby create more centres of economic activity,” he noted.

The Small and Medium-Sized Entities Audit Manual consist of three volumes: Volume 1 – Core Concepts, Volume 2 – Practical Guidance and Volume 3 – Small and Medium-Sized Entity Audit Templates (SMET). The development of the audit manual was carried out under a grant extended by the World Bank to the Institute of Chartered Accountants of Sri Lanka aimed at enhancing the core technical activities of the institute to upgrade the skills sets of the SMPs

The Volume 1 and 2 of the audit manual was developed based on the Guide to Using ISAs in the Audits of Small and Medium-Sized Entities, Volume 1 and Volume 2, issued by the International Federation of Accountants (IFAC). Volume 3 of the audit manual, which consists of comprehensive audit templates to support SMPs to document the audit work, was developed by the consultants Ernst & Young.

With business practices becoming more complex, the financial reporting thereon and the conduct of audit of financial statements is becoming more complex. Further, with the introduction of Clarified Sri Lanka Auditing Standards which are based on the International Standards on Auditing (ISAs) issued by the International Auditing and Assurance Standards Board (IAASB), SMPs operating in Sri Lanka find it difficult to keep up with the higher level of expertise and technical sophistication. As a result, there was a necessity to provide support to practitioners in order to maintain the quality of the profession in carrying out audits of financial statements.

This audit manual is intended to enable practitioners to develop a deeper understanding of an audit conducted in compliance with Sri Lanka Auditing Standards (SLAuSs) through explanation and illustrative examples. It offers a practical “how-to” audit approach that practitioners may use when undertaking a risk-based audit of an SME. Ultimately, it would help practitioners to conduct high-quality, cost-effective audits, enabling them to better serve SMEs and, in turn, the wider public interest.

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CA Sri Lanka launches SME toolkit for 2014

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