ECONOMYNEXT – Sri Lanka’s rule-setting accountants’ body has adopted new international guidelines under which finance professionals, including auditors, are obliged to report wrongdoing in companies they audit or work for, setting aside confidentiality requirements in the public interest.
The Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) said it has decided to adopt the “Responding to Non Compliance with Laws and Regulations” standard, known as NOCLAR, when it becomes effective internationally from 15th July 2017.
This will ensure that Sri Lanka is in line with the latest international ethics standards, it said in a statement.
The announcement was made on Thursday by CA Sri Lanka President Lasantha Wickremasinghe while addressing audit committee members and board directors at an awareness session on changes to the reporting on audited financial statements, held at the institute.
"NOCLAR is seen as an important initiative aimed at safeguarding the accounting profession, and also enhance the reputation and respect of professional accountants across the world," the statement said.
Wickremasinghe said that NOCLAR stimulates greater accountability among organizations, help protect stakeholders and the general public from substantial harm resulting from violation of laws and regulations and strengthen the reputation of the profession.
This will position the accountancy profession to play a greater role addressing financial fraud, money laundering and corruption, he added.
The stricter ethics standards were issued by the International Ethics Standard Board for Accountants (IESBA) under which professional accountants must report wrongdoing by a client, even when there is no legal or regulatory requirement to do so.
Reyaz Mihular, Chairman of the Professional Conduct (Ethics) Committee and member of IESBA said accountants have been permitted to set aside the duty of confidentiality under the Code of Ethics for Professional Accountants in order to disclose NOCLAR to appropriate public authorities in certain circumstances.
Responding to Non-compliance with Laws and Regulations is an international ethics standard for auditors and other professional accountants.
It sets out a first-of-its-kind framework to guide professional accountants in what actions to take in the public interest when they become aware of a potential illegal act, known as non-compliance with laws and regulations, or NOCLAR, committed by a client or employer.
The standard applies to all categories of professional accountants, including auditors, other professional accountants in public practice, and professional accountants in organizations, including those in businesses, government, education, and the not-for-profit sector.
It addresses breaches of laws and regulations that deal with matters such as fraud, corruption and bribery, money laundering, tax payments, financial products and services, environmental protection, and public health and safety.
CA Sri Lanka said its Professional Conduct (Ethics) Committee will launch a series of awareness programmes, in collaboration with IESBA, for professional accountants including practicing members, Board of Directors including audit committees and the general public.
(COLOMBO, Nov 25, 2016)