Listed companies sans audit committees shocks SEC

OVER 38 percent of the listed companies do not have audit committees says, the Chairman of the Securities and Exchange Commission of Sri Lanka Dr. Dayanath Jayasuriya.

In the September 'Audit Committees of listed Companies in Sri Lanka' report he states that this is very surprising.

This was discovered after the Securities and Exchange Commission few months ago decided to conduct a survey focusing particularly on Audit Committees 132 listed companies responded to this questionnaire.

The questionnaire comprised 23 questions with 14 open-ended questions and 9 close-ended questions.

The survey also found out that most number of companies did not have an independent or non-executive Director as the Chairman of the Board of Directors.

"Only 44 percent of listed companies (52 listed companies) had an independent or non - executive Director as the Chairman of the Board of Directors.

The number of companies that did not have an independent or non-executive Director as the Chairman was substantial. (56 percent) "We also found out that the Chief Executive Officer was on the Board of Directors of majority of the listed companies and 29 listed companies did not have the CEO on the board," the report stated.

The official's list of the Colombo Stock Exchange (CSE) contained 239 companies.

In the wake of major corporate scandals and failures, attention has come to be focused on promoting a culture of "Good Corporate Governance" within Listed Companies.

Even though we do not have in Sri Lanka a binding code prescribing various requirements and best practices, it was assumed that most, if not all Listed Companies have Audit Committees and other mechanisms and procedures, "he said.

However, due to occasional reports that compliance with good Corporate Governance practices leaves much to be desired.

This report is published in the hope that Listed Companies will take action to establish Audit Committees, or if such Committees do exist, address any deficiencies or limitations.

More and more members and investors examine that type of good corporate practices followed by companies when they make investment decisions, and it is no longer possible to be oblivious to the important role played by Audit Committees Dr. Dayanath Jayasuriya said.