Browsing by Author "Wijerathna, A.G.H.S.K."

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Audit Quality: Perception of Audit Practitioners in Sri Lanka
(17th International Conference on Business Management (ICBM 2020), Colombo, Sri Lanka, 2020) Perera, Prabath; Wijerathna, A.G.H.S.K.
The quality of the audit plays an important role in the financial markets as a factor which creates the investor confidence is auditor’s opinion on the financial statements. Number of companies collapsed globally and as well as locally as a result of allegations made by employees of those companies. However, the audit report of these companies did not address any problems which were existed in the companies. Therefore, it is questionable whether the quality of audits is achieved. A standardized audit quality framework does not exist in Sri Lanka to measure audit quality. The Institute of Chartered Accountants of Sri Lanka (ICASL) has issued Sri Lanka Standard on Quality Control (SLSQC) to maintain the audit quality in Sri Lanka. However, it is not sufficient to measure the audit quality. In most of the developed countries, a separate audit quality framework exists as a guide to measure the audit quality. In the absence of such a framework, this study is aimed at examining the perception of junior level auditors on the audit quality indicators and how they prioritize audit quality indicators in order to enhance the audit quality. In order to achieve this objective, a questionnaire was developed and distributed among 120 junior-level auditors who work at Audit Firms in Sri Lanka. A total of 76 responses were able to obtain. The data was analysed using descriptive statistics. As per the results of this study, the factor which has a significant effect on the audit quality is the mental/ psychical status of the auditor. Moreover, the results also suggest audit engagements carried out based on the ethical standard rather than based on the legal standard has an effect on increasing the quality of the audits performed. Further, the perception of the junior level auditors differs based on the gender, academic qualifications and position in the firm for certain audit quality indicators. Based on the results of this study it can be recommended to adopt a new audit quality framework by the government relevant governing bodies to enhance the audit quality in Sri Lanka.
Corporate Governance and Financial Statement Frauds: Evidence from Sri Lanka
(Faculty of Commerce and Management Studies, University of Kelaniya, 2021) Rajapaksha, R.A.S.; Wijerathna, A.G.H.S.K.; Muthunayake, H.; Weerawickrama, V.L.
With the increased number of frauds taking place in the corporate world regulators and policymakers around the world have been making attempts avoid or reduce the frauds. Implementation of corporate governance code can be identified as one of the major mechanisms implemented against frauds. However, regardless of the implementation of such mechanisms still the frauds continued to be taking place. Accordingly, an attempt should be made to identify the extent of influence of Corporate Governance Code in the prevention and detection of frauds in the companies. The study was conducted based on 40 listed companies in Colombo Stock Exchange. The occurrence of the financial statement frauds was measured by incorporating Beneish M Score model. Corporate governance has been measured in terms of audit committee, CEO duality and Board Composition. As per the results of this study the corporate governance, board composition and CEO duality does not have a significant impact on the financial statement frauds. However, the results suggest that existence of audit committee has significant impact on the financial statements frauds. The existence of audit committee ensures the effective operation of internal controls which can prevent and detect frauds to a large extent.
Impact of Audit Committee Characteristics on Bank Performance: Evidence from Licensed Commercial Banks Listed in CSE
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Madampage, D.I.; Wijerathna, A.G.H.S.K.
The audit committee is a critical component of corporate governance, playing a pivotal role in ensuring the integrity and transparency of financial reporting within an organization. Because audit committee characteristics have a significant impact on a firm's financial performance, it is important to understand those characteristics. This study aims to determine the impact of audit committee characteristics on the financial performance of licensed commercial banks listed on the Colombo Stock Exchange. The sample of the study consists of ten commercial banks listed in the Colombo Stock Exchange and data was collected from annual reports from 2013 to 2022. This study measures the bank's performance based on return on assets and returns on equity and audit committee characteristics by incorporating audit committee size, independence, number of meetings, members' professional finance education, and gender diversity. Bank asset size and age were used as the control variables in this study. Very few studies have been conducted on the impact of audit committee characteristics on bank performance focusing on the Sri Lankan banking sector. A panel regression analysis was performed to identify the relationships between audit committee characteristics and bank financial performance. According to the findings of the study, audit committee independence, gender, and professional finance education have a positive influence on the bank's financial performance, and audit committee size and the number of meetings have a negative influence on financial performance. However, insignificant relationships exist between the audit committee meeting and members' professional finance education and bank financial performance. Also, the asset size of the bank and age significantly impact the bank’s financial performance. This study contributes to the existing literature on corporate governance and bank financial performance by providing the framework that affects the relationship between audit committee characteristics and bank financial performance in the context of licensed commercial banks listed on the Colombo Stock Exchange.
The Impact of Audit Quality on Financial Performance of Listed Finance Companies in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Kumari, M.D.S.; Wijerathna, A.G.H.S.K.
In Sri Lanka's dynamic financial sector, the link between audit quality and the performance of listed finance companies is a critical research focus. Exploring how audit quality shapes performance is essential for effective corporate governance and informed decision-making, all contributing to the sustainability and trustworthiness of Sri Lanka's financial environment. This article investigates the impact of audit quality on the financial performance of listed finance companies in Sri Lanka. The research sampled the data of 30 companies spanning from 2012 to 2022 obtained from the listed finance companies According to the results of the study the audit committee meeting frequency has an insignificant impact on the financial performance. However, audit committee independence, financial expertise, and audit committee size indicate a strong and positive relationship with financial performance. Therefore, this study provides valuable insights into how audit committee attributes affect profitability. Furthermore, this research may guide companies’ top management in restructuring the audit committee to improve corporate governance practices. Also, the results suggest that finance companies should ensure that listed firms set up audit committees with more independent directors and financial experts. Consequently, this paper sheds light on the corporate environment, so investors may find this research helpful in making their investment decisions.
The Impact of Key Audit Matters Reporting on Audit Quality: Special Reference to the Commercial Banks in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Wijesinghe, M.R.N.D.; Wijerathna, A.G.H.S.K.
The concept of Key Audit Matters reporting has gained prominence in recent years to enhance transparency and improve the quality of financial reporting. Auditor experience enhances an audit's overall effectiveness, efficiency, and quality. When it comes concerning major audit issues, auditors' extensiveness of experience empowers them to focus on the most important issues, implement professional judgment, and communicate effectively with stakeholders, therefore improving the audit process and the ensuing financial statements' reliability. This research study examines the impact of Key Audit Matters reporting on audit quality specifically in the context of commercial banks operating in Sri Lanka. The existing literature shows both negative and positive impacts on the relationship between the Key Audit Matters reporting and Audit Quality and the current study is expected to examine this impact in the Sri Lankan context. The findings of this research are expected to shed light on the effectiveness of Key Audit Matters reporting as a tool to enhance audit quality within the commercial banking sector in Sri Lanka. This study identified Key Audit Matters that have a significant positive impact on audit quality. Further, the results may help regulators and standard-setting bodies in assessing the benefits and challenges associated with the implementation of Key Audit Matters reporting and may provide valuable insights for auditors and commercial banks in improving their reporting practices. Furthermore, this study contributes to the growing body of literature on audit quality and financial reporting transparency in emerging economies, particularly in the banking sector of Sri Lanka.
Reasons for Tax Evasion in Sri Lanka – A Taxpayer’s Perspective
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Kaushalya, A.N.; Wijerathna, A.G.H.S.K.
Tax evasion, a global phenomenon, disproportionately impacts developing economies like Sri Lanka, hindering crucial government revenue and undermining public services. This study delves into the internal and demographic factors influencing taxpayers' attitudes toward evasion in this context. Employing a sample of 200 individuals, including accounting professionals and management undergraduates, the research sheds light on taxpayer perspectives beyond the typical fiscal lens. The study identifies key independent variables affecting taxpayers' attitudes towards evasion (ATE): fairness perception (FP), tax knowledge (TK), corruption (C), and complexity in the tax system (CTS). Fairness perception, surprisingly, does not significantly impact ATE, suggesting alternative priorities like personal gain. High tax knowledge, however, positively correlates with ATE, potentially emboldening evasion through familiarity with procedures. Similarly, increasing complexity in the tax system positively influences ATE, highlighting its burden and potential motivation for evasion. Conversely, perceived corruption demonstrably discourages evasion, emphasizing its deterrent effect. Demographic characteristics act as moderating factors, influencing the relationships between these variables and ATE. Higher education amplifies the positive association between tax knowledge and ATE, indicating that educated individuals may leverage their knowledge for evasion. Income, on the other hand, weakens the negative influence of perceived corruption on ATE, suggesting that wealthier individuals might be less sensitive to its deterrent effect. Certain professions also moderate the relationship between corruption and ATE, implying that professional ethics or codes of conduct can mitigate the influence of corruption in specific occupational groups. This research offers valuable insights for Sri Lankan policymakers seeking to improve tax compliance. By enhancing tax knowledge, reducing corruption, and simplifying the tax system, while tailoring interventions based on demographic factors, authorities can create a more equitable and compliant tax environment. It highlights the need for future research to delve deeper into cultural influences, external factors, and longitudinal studies to capture a more nuanced understanding of taxpayer behavior and the dynamic influences on tax evasion attitudes.
The Relationship between Cash Conversion Cycle on Firm Profitability; With the Moderating Effect of COVID-19: A Study of Listed Manufacturing Companies in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Tharaka, S.K.K.R.; Wijerathna, A.G.H.S.K.
In the dynamic and competitive business landscape, firms constantly strive to optimize their financial performance. The cash conversion cycle, a crucial metric of working capital efficiency, plays a pivotal role in influencing a firm's profitability. This study delves into the intricate relationship between the cash conversion cycle and firm profitability, particularly during the unprecedented challenges posed by the COVID-19 pandemic. Utilizing a comprehensive sample of 30 manufacturing companies listed on the Colombo Stock Exchange in Sri Lanka from 2017 to 2022, this research utilizes regression analysis to examine the impact of the cash conversion cycle on panel profitability. The study explores the complex interaction between the cash conversion cycle and firms' profitability, emphasizing the moderating influence of the COVID-19 pandemic. The research reveals that the pandemic exacerbates the negative impact of the cash conversion cycle on profitability, especially on return on assets. Effective liquidity management is crucial during economic uncertainty, as businesses with a shorter cash conversion cycle exhibit higher profitability. Overall, The investigation emphasizes the need for adaptive liquidity practices to sustain and improve firm profitability, especially during challenges like the COVID-19 pandemic. Research indicates that the pandemic has intensified the negative effect of the cash conversion cycle on profitability, highlighting the crucial role of liquidity management in times of economic uncertainty. This study makes a novel contribution to the literature by examining the moderating impact of COVID-19 on the relationship between the cash conversion cycle and firm profitability. Further, these findings enrich the financial management literature and offer practical advice to businesses navigating the present economic situation, particularly during the COVID-19 pandemic. The study suggests that prudent liquidity management can help maintain and increase firm profitability in uncertain times. This advice is particularly relevant as businesses face unprecedented challenges due to the pandemic.
Satisfaction of Undergraduates on E-Government Services Provided by Public Sector Entities
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Ranaweera, R.K.K.K.; Wijerathna, A.G.H.S.K.
The concept of e-government, or electronic government, services emerged as a response to the increasing digitization and technological advancements in the late 20th century. E-government services refer to the use of information and communication technologies (ICTs) to enhance and deliver government services, information, and communication to citizens. This study aims to examine the satisfaction of undergraduates with e-government services provided by public sector entities. In addition, this study also aims to identify the improvements that are required for e-government services to enhance user satisfaction in Sri Lanka. A standard questionnaire was developed to measure the demographic profile and satisfaction of undergraduates on e-government services. The questionnaire was distributed among a sample of 384 undergraduates. Undergraduates on average agree with the statement that by using the e-government portal, it is easy to find information about services as soon as possible, and for the statement that is e-government service offers helpful assistance through E-mail or other electronic means. When identifying the improvements required for e-government services, the majority of the respondents have suggested that enhancing citizen education and awareness is essential. Furthermore, respondents have suggested governments may efficiently reach a wider range of people by offering e-government services in Sinhala, English, and Tamil. To enhance government efficiency, improve citizen engagement, and foster economic and social development, satisfaction with e-government services is essential in the Sri Lankan context.
A Systematic Literature Review on Forensic Accounting
(11th International Conference on Business and Information (ICBI 2020), Colombo, Sri Lanka., 2020) Wijerathna, A.G.H.S.K.; Perera, H.A.P.L.
The objective of this study is to systematically analyze the existing literature on forensic accounting and thereby identifying the existing gap in the forensic accounting literature. In the era of increasing accounting scandals, the importance of forensic accounting is also increasing. This study provides an overview of previous studies which have been conducted in the area of forensic accounting which can be used by professionals, regulators, academics, researchers, forensic accounting practitioners and etc. The current study systematically analyzes a sample of twenty-four (24) research articles which have been conducted in the broad area of forensic accounting. The sample has been selected from research articles published during period starting from 2015 to 2020. The results of this study reveal importance of incorporating forensic accounting education into undergraduate and graduate level courses. More importantly, forensic accountant should have skills in multi-disciplinary areas. Similarly, knowledge on big data is essential to be a good forensic accountant. Further, this study suggests four (04) key areas for future researches which are; importance of forensic accounting education, how forensic accounting could be used to reduce financial collapses practical application of forensic accounting, and the role of forensic accountant in the field of auditing.