The Development of Accounting and Financial Reporting Practices in Sri Lanka: An Exploratory Investigation

Jayasinghe Hewa Dulige, Nadana Abayadeera, Muhammad Jahangir Ali and Paul Mather
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Jayasinghe Hewa Dulige: School of Business, Melbourne Institute of Technology, Australia
Nadana Abayadeera: Department of Accounting, Deakin University, Australia
Muhammad Jahangir Ali: Department of Accounting and Data Analytics, La Trobe University, Australia
Paul Mather: Department of Accounting and Data Analytics, La Trobe University, Australia

The International Journal of Accounting (TIJA), 2019, vol. 54, issue 02, 1-36

Abstract: In this paper, we examine the factors that influence the development of accounting and reporting practices in Sri Lanka in the backdrop of its political and economic environment. We find that the early days of accounting in Sri Lanka were heavily influenced by the British colonial system. Subsequently, its greatest influence was derived from the regulatory and institutional framework backed by local and British professional accounting bodies. We also interview key stakeholders to draw insights on how the institutional factors contribute to the development of financial reporting in Sri Lanka. We discover that the Institute of Chartered Accountants of Sri Lanka (ICASL) is a key player in developing and implementing accounting standards and the best financial reporting practices. We observe that although the Sri Lankan Government has undertaken many initiatives to improve the quality of financial reporting, monitoring and enforcing regulations remain weak partly due to political interference. Therefore, we suggest that strengthening the existing regulatory mechanisms will help to improve the reporting quality and build investor confidence.

Keywords: Accounting regulations; financial reporting practices; international financial reporting standards; corporate governance; Sri Lanka (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1142/S1094406019500082

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