Sri Lankan auditors may be compelled to report financial irregularities

COLOMBO (EconomyNext) – Sri Lankan auditors may be asked to report any irregularities they find when auditing financial statements of listed companies under new regulations that are being considered, the head of the capital markets watchdog said.

It was important that auditors execute their duties with “due diligence”, Thilak Karunaratne, Chairman of the Securities and Exchange Commission said.

“We are exploring the possibility of placing a legal duty on audit firms carrying out audits of Listed companies to report any irregularities or improper conduct they find in the financial statements of the company to SEC,” he said.

 “This type of responsibility imposed on auditors will assist the regulator to be more vigilant and take preemptive action to protect the interest of investors,” he told the certificate award ceremony of the Corporate Directors Programme jointly conducted by The Institute of Chartered  Accountants of Sri Lanka and the SEC.

“This would lead to increased credibility and greater transparency of both listed companies and audited reports particularly in the mind of potential investors,” Karunaratne said according to the text of his speech released by the SEC.

He said this was a legal requirement present in ther jurisdictions such as Malaysia.

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