2007年-世界发展银行全球_Sri_Lanka_-_Public_Sector_Accounting_and_Auditing___A_Comparison_to_International_Standards_78页_3mb

Summary of Sri Lanka Public Sector Accounting and Auditing

Core Content

This document is a country report prepared by the World Bank in March 2007, comparing Sri Lanka's public sector accounting and auditing practices with international standards. The report aims to support the implementation of more effective Public Financial Management (PFM) by improving the quality of accounting and audit processes, and by identifying gaps and suggesting improvements to align with international standards.

Main Objectives

• To provide stakeholders with a common understanding of the current state of public sector accounting and auditing in Sri Lanka.
• To assess the existing variances from international standards.
• To outline paths for reducing these variances.
• To establish a continuing basis for measuring improvements in public financial management.

Key Findings

Public Sector Accounting

• Institutional Framework: Sri Lanka lacks a formal framework for public sector accounting standards, although some progress has been made in aligning with the Cash Basis IPSAS.
• Accounting Laws and Regulations: The Sri Lankan Accounting and Auditing Standards Act (1995) mandates the use of Sri Lanka Accounting Standards for revenue-earning entities, while ministries and departments follow the Financial Regulations (1992), which do not incorporate international standards.
• Education and Training: Public sector accountants are required to have a university degree, but training does not fully align with the International Education Standards (IES).
• Code of Conduct: There is no specific code of ethics for public sector accountants, and the existing code is based on the general code for public servants.
• Accounting Standards: Government accounts are largely in line with the Cash Basis IPSAS, but there is no formal adoption of IPSAS. SOE accounts follow IFRS, but are often qualified by auditors due to compliance issues.
• Financial Statements: The statement of cash receipts and payments is in IPSAS form, except for third-party payments. There is a need for more comprehensive financial statements that include contingent liabilities and accounting policies.
• Consolidated Financial Statements: Currently, only the Central Government Sector is included in the financial statements, with public enterprises and SOEs excluded. Steps are being taken to include controlled entities in future reports.

Public Sector Auditing

• Institutional Framework: The Supreme Audit Institution (SAI) lacks a formal Audit Act, and its legal framework does not fully support the independence and powers required by INTOSAI standards.
• Audit Standards: While there is a willingness to adopt INTOSAI and IFAC standards, they are not formally adopted. The current audit methods are outdated and focus on budget compliance rather than certification audit.
• Code of Ethics: There is no code of ethics equivalent to the INTOSAI standards, and the current code is based on the general conduct code for public servants.
• Accountability and Independence: The SAI is not fully independent in administrative and resource management, and the process for accountability does not meet international standards.
• Training and Competence: The education and training of auditors do not fully meet the requirements of international standards. Peer reviews have identified several inadequacies.
• Quality Assurance and Audit Methods: There are no adequate quality assurance programs, and the audit methods are not aligned with international standards. The audit process lacks proper evidence-gathering and working paper systems.
• Audit Recommendations: The response to audit recommendations is inadequate, and an appropriate system needs to be established.

Action Plans

• A new law is not required, but financial regulations will be amended to adopt IPSAS.
• A proposal for collaboration with CIPFA is in progress, and education reforms are expected to include IPSAS in the curriculum.
• A Public Sector Committee (PSC) is planned to be established by mid-2007 to set public sector accounting and auditing standards.
• A draft audit act is being prepared and awaits approval, with a decision expected before the end of 2007.
• The Institutional Development Plan (IDP) will address skills analysis and audit methodology improvements.
• The World Bank will support the implementation of the IDP and discuss required support with the DG State A/Cs by mid-2007.
• The PFM performance measurement framework from the PEFA program will be used to monitor progress in PFM reform.

International Standards and Alignment

• IPSAS: A core set of accrual-based standards and a cash basis standard are available. The transition from cash to accrual reporting is underway.
• IES: Training should be aligned with these standards, and the DG State A/Cs will explore changes to the efficiency bar examinations.
• INTOSAI and ISA: These standards are not formally adopted, but there is a willingness to follow them. A code of ethics equivalent to INTOSAI is expected to be adopted.
• Audit Act: A formal audit act is needed to ensure the SAI's independence and proper functioning.

Conclusion

Sri Lanka is progressing towards the adoption of international accounting and auditing standards, particularly IPSAS. However, there are significant gaps in the legal and institutional frameworks, education and training, and audit methodologies. The report outlines a series of actions to be taken in 2007, including the amendment of financial regulations, the establishment of a PSC, and the development of a more comprehensive and reliable financial reporting system. The World Bank and other development partners are expected to provide support in these efforts.