Tea with Lal Nanayakkara

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Profile

Name - Lal Nanayakkara

School attended - Richmond College Galle

Civil Status - Married, has one child.

Qualifications -

Academic - Bachelor of Arts for University of Peradeniya

Professional - Fellow of the Institute of Chartered Accountants.

Fellow of the Member of Association of Accounting Technicians.

Current Position - Head of the Lal Nanayakkara Audit and Tax Consultant Service.

Professional Experience - Worked as an advisor to the International Accountancy Education Standard Board of the International Federation of Accountants.

Past President - South Asian Federation of Accountants

Past President - ICASL

Former Chairman - People's Bank

Hiran H.Senewiratne

The accountancy profession is needed for any country in the medium to long term development of the economy, Immediate Past-President of the Association of Accounting Technicians of Sri Lanka (AAT) Lal Nanayakkara said.

He said accountants have set high standards in many countries.

The demand for qualified accountants with the globalisation of the profession is now gradually increasing. Accountancy professionals are leaving the country for future prospects mainly due to the country's political and civil uncertainty.

With the current demand for accountancy professionals in other countries, Sri Lanka is facing a dearth of qualified accountants, Nanayakkara said.

Q: There is a good demand for Sri Lankan accountants in most countries. What is your comment?

If we compare our accountants within the region we maintain high standards as we are adopting international accounting and auditing standards. Our internal auditing systems are up-to- date, whereas our Asian colleagues cannot say the same thing. Although Sri Lanka is a small country our professionals represent all professional accountancy bodies.
 

Q: AAT is a stepping stone to become a fully-fledged accountant. What is the current status?

At present we have more than 20,000 student members. Therefore when it comes to AAT we are clearly ahead of all countries in the region. Certain countries in the region including India and Nepal have also turned to us for our advice and guidance to set up AAT Associations in their countries.

Recently, I visited Chennai with Prof. Watawala and met the representatives of the Cost and Works of India to discuss how they should set up a Technician Association in India.

Q: Financial reporting is one of the important areas where companies have to be serious about when transparency is concerned. You being a prominent accountant how do you look at this matter?

Our reporting standards are on a higher level. In 1995 the Government made it mandatory especially for business entities to register with the Sri Lanka Accounting and Auditing Standards Bureau.

The tradition of the best corporate reporting awards competition is one of the well organised events in the ICASL calendar.

This is itself a certification.

Q: How about Sri Lanka's accounting and auditing standards compared to other countries in the region?

Sri Lanka Auditing Standard Act of 1995 made auditing standards to be followed by companies. Under the Act, two Committees were set up, namely the Sri Lanka Accounting Standards Committee and Sri Lanka Auditing Standards Committee. These two committees formulated standards which was approved by the Council of ICASL and then Gazetted.

The non-compliance of this involves heavy penalties, which is a good development. ICASL has set up an urgent task force, which will clarify any uncertainty relating to implementation of standards, which is not second to any other country.

On the applicability to Sri Lanka these two bodies based on this deliberation prepares Sri Lankan Standards which is in the draft form. We will be seeking the public's response on these standards. When necessary we would adjust the standards accordingly.

Q: What do you think about the issue on irregularities in financial reporting?

To overcome that we as professionals should be transparent in financial reporting. Also in professional accountancy bodies, governance is linked with the Code of Ethics.

Therefore these professional bodies are keen that the Code of Ethics is strictly followed by the members.

Q: There is a gradual erosion of confidence reposed in professional accountancy by stakeholders. Why is that?

I believe mainly due to the "expectation gap" which means that the expectation of the public as duties of accountants on the one hand and legal professions' duty on the other hand. As long as this gap exists it will prevail.

Further, the public believes that auditing is done to detect errors and fraud. This is not true, as the whole objective of auditing does not include detection of errors. Similarly certain stakeholders also believe that it is up to auditors to formulate internal control and account procedures.

Q: Why can't management accountants take action to close this gap?

The duty of management accountancy professionals is not taking measures to close the gap. The audit reports clearly define respective duties of the professional auditors and the management.

Q: What steps have professional bodies like AAT and ICASL taken to improve the quality of students?

We have an open door policy. Once they join as students to our accounting institutions it helps them to improve quality standards.

Therefore there is a demand for the profession mainly due to confidence reposed by stakeholders.

Q: You are the President of AAT. Why become an accounting technician?

Assisting every professional accountant is an accounting technician.

An accounting technician's role is to operate, maintain and improve systems to record, plan, monitor, analyse and report on financial and related activities of an organisation.

Today there is a growing demand for trained competent support staff who can provide professional accountants with the information they need.

It also helps carry out their instructions and ensure that financial systems are properly maintained and controlled.

Statistics have proven that employers prefer accounting technicians who are specifically trained to operate at that level, rather than partly qualified professionals.