The Institute of Chartered Accountants of Sri Lanka (CA) has launched the ‘Non-Financial Reporting Guideline’.
The guideline is envisioned to be the precursor to a formal standard that governs non-financial statements in Annual Reports. The guidelines though currently voluntary are expected over due course to be standardized by the Securities and Exchange Commission (SEC).
Taskforce to Develop Non-Financial Reporting Practices in Sri Lanka Chairman Nuwan Withanage noted that currently even internationally there were no mandatory standards for the reporting of non-financial information.
Withanage noted that companies could either through omission or the use of favourable standards paint a misleading picture of their operations. Withanage hoped that the current guideline would help initially create a convention that is widely followed by Sri Lankan corporates which subsequently become standardized.
Withanage was speaking on June 22 at the CA Building at the official launch of the guideline. Withanage noted that CA shall place the new guidelines as part of the marking criteria for future Annual Report Awards. He said that this alongside the usage of ‘Assurance Partners’ would act as a catalyst to bring comparable information across publicly disclosed documents in the capital markets. The Guidelines build upon international specific guidelines like the Global Reporting Initiative, Task Force on Climate-related Financial Disclosures, Sustainability Accounting Standards Board, and the Climate Disclosure Standards Board amongst others to provide guidance for Sri Lankan companies.
Withanage said, “In the future statements will be meaningful. This is the path to standardization.” He noted that in time to come it would not be uncommon for the SEC to mandate the disclosure of items such as water usage in commonly accepted metrics comparable across the capital markets.
SEC Chairman Viraj Dayaratne noted that the world was increasingly looking towards the triple bottom line. He added that the reduction of systemic risk in capital markets involved a deep look at the Environmental, Social, and Governance attributes of an entity. He noted that sustainability in the modern-day extended beyond issues surrounding the environment and now also included matters of social equity.
CA Sri Lanka President Sanjaya Bandara noted that Annual Reports formed the bedrock upon which many companies build their standing in the broader community. He noted that by increasing the quality of non-financial reporting they were facilitating considerable investment into the country.
The new standard is set on the principle of ‘Core and More Approach’ Smaller firms are also able to follow the guidelines with larger entities being able to provide more in-depth facts to their stakeholders.
At this stage of the initiative, the guidelines are both voluntary and are designed to help companies provide material information to their stakeholders. The guidelines are available for purchase through either the CA website or at their physical locations. (DP)