International Conference in Accounting Researchers and Educators (ICARE)

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Does mandatory adoption of international financial reporting standards (IFRS/SLFRS) deter the earnings management of Sri Lankan firms?
(Department of Accountancy, University of Kelaniya, 2015) Udayakumara, K.G.A.; Weerathunga, P.R.
The aim of this study is to examine the earnings management behavior of Sri Lankan firms following mandatory adoption of International Financial Reporting Standards (IFRS/SLFRS). Especially, this study investigates whether the mandatory adoption of IFRS/SLFRS in the Sri Lanka (SL) has resulted in less earnings management for SL firms. Prior to the adoption of IFRS/ SLFRS for financial years beginning 1 January 2012, SL firms reported under Sri Lankan Accounting Standards (SLAS). Thus, this study predicted that the earnings management has decreased significantly after mandatory adoption of IFRS/SLFRS in 2012. The sample this study consists of 157 firms listed on the Colombo Stock Exchange and data were collected from financial years 2009/2010 to 2013/2014. This study uses five individual measures of earnings management relating to earnings smoothing, managing towards earnings targets. Firms are said to have reduced their earnings management if they display lower levels of earnings smoothing, less management towards earnings targets. Contrary to the prediction, the results of this study reveal that SL firms exhibit higher level of earnings smoothing after mandatory adoption of IFRS/SLFRS and thereby indicative of higher level of earnings management. However, consistent with the prediction SL firms display lower level earnings management in term of less managing towards earning targets. The level of earning management is one aspect of reporting quality of a firm. Therefore, lower level of earnings management is in turn reflects better reporting quality. Thus, these findings suggest that there is room for further improvement in order to ensure that firms consistently apply the requirement of IFRS/ SLFRS and make improvements in all aspects of reporting quality.
Students’ perception of internship programme in accounting
(Department of Accountancy, University of Kelaniya, 2015) Madurapperuma, M.W.; Thilakarathne, P.M.C.; Perera, H.A.P.I.
Internship is an important part of a study program for accounting undergraduates in all universities in Sri Lanka. This research explores the students’ perception of their experience in Internship training before and after engaging the training. A questionnaire was given to 107 fourth-year accounting undergraduates in the University of Kelaniya, who had introduced internship training for its undergraduates. The data was analyzed using descriptive statistics. The results show that the accounting students had moderate levels of perception on all the categories, except future career, which showed a low level of perception. This meant that they believed that internship training had not given them the confidence that they will be able to obtain the future career they want in accounting profession. Another interesting finding of the research, through a correlation analysis shows that the longer the duration of internship training, the higher the readiness and future career development among the accounting undergraduates.
Association of accounting information on stock prices of licensed commercial banks in Sri Lanka
(Department of Accountancy, University of Kelaniya, 2015) Perera, R.M.S.M.; Gunaratne, Y.M.C.
The value relevance of accounting information has become one of the most researched area among accounting researchers. However the value relevance literature provides contradictory conclusions on the association between accounting information and stock prices in different stock exchanges including both developed and developing market settings whilst there is a very limited knowledge in this regard in Sri Lankan Context. Hence this paper focused on examining the association between accounting information and stock prices of licensed commercial banks in Sri Lanka to bridge the knowledge gap in Sri Lankan context. The study conducted based on the hypothesis that there is significant association between accounting information and stock prices in licensed commercial banks in Sri Lanka. Core Capital Adequacy Ratio, Total Capital Adequacy Ratio, Net Non Performing Advances Ratio, Interest Margin, Return on Assets, Return on equity and Statutory liquid Assets Ratio were used as proxy for accounting information. The sample period of the study spans for 5 years from 2007 to 2011. The relevant data was collected from the CSE data library and the published annual reports of all the licensed Commercial Banks whose data is available for the sample period. Both descriptive statistics and inferential statistics were used to analyze data. The statistical analysis revealed that 36% of variations of share prices of Licensed Commercial Banks in Sri Lanka could be explained through the independent variables under study. Further this study revealed that there is a significant relationship between share price and Interest Margin, Return on Equity and Return on Asset. Accordingly this study concluded that there is an association between the accounting information and the share prices of the licensed commercial banks in Sri Lanka hence the accounting information is value relevance in determining share prices of such companies.
Difficulties students experienced in learning transfer pricing
(Department of Accountancy, University of Kelaniya, 2015) Abeysekra, I.; Jebeile, S.
With the aim of understanding student difficulties in learning and applying higher learning material, we explored the transfer pricing topic taught as a case presentation in an undergraduate accounting program at an Australian university. This study invited 25 students to take part in the study after they had learned the topic and given one week to understand it. We provided a transfer pricing problem that they have earlier faced, by adapting a problem presented in their essential reading. We compared student answers with a model answer prepared before they took on the problem. It also interviewed students to gain further insights into their learning difficulties. The study found that students experienced learning difficulties at various stages in trying the problem.
The ICT competencies of new accounting students of different admission criteria: the case of Sri Lankan private university
(Department of Accountancy, University of Kelaniya, 2015) Amarathunga, P.A.B.H.; Pathiratne, S.
The current trend in business and accounting settings requires an accountant who is an ICT literate. International Federation of Accountants (IFAC) published the International Inculcation Guidelines that include ICT erudition and competency requisites for professional accountants. These guidelines are intended to avail its member bodies in preparing professional accountants to work within the ICT environment. Amid others, the strategies highlight the ICT erudition and competency requisites for the accountants vis-a-vis the ICT users. This study aims to investigate the level of information and communication technology (ICT) competency possesses by new accounting students at the Private University in Sri Lanka according to their Admission Criteria. The study examines five software applications deemed critical for an accountant, namely, word processing; spreadsheet; database; PowerPoint presentation; and Internet and email. A survey was conducted on 182 first year accounting students. Overall, students from the Foundation Diploma Admission Criteria are found to possess the ICT competency better than those from other Admission Criteria. The competency of students from London AL and GCE A/L Admission Criteria in spreadsheet is found to be below average. All students regardless of their Admission Criteria were found to be less competent in Database Management System (DBMS).
The impact of embedding information and communication technology content in accounting courses and its effect on overall students’ performance
(Department of Accountancy, University of Kelaniya, 2015) Thilakerathne, P.M.C.; Madurapperuma, M.W.
This study examines the impact of embedding Computer Aided Learning (CAD) in accounting courses in one of the conventional university’s accounting courses and its effect on overall students’ performance. It differs from the previous research in that accounting undergraduates taught MYOB accounting software in their second year of four year honours degree. At the same time other ICT courses in the accounting curriculum geared towards training students to prepare financial statements using spreadsheets etc. Student performance does not alone describe the ICT content in accounting curriculum and in effect included prior accounting knowledge, English knowledge and gender as other explanatory variables. Multiple regression analysis on student performance shows that prior accounting knowledge and its performance, internship performance, English knowledge at the entry level to the accounting degree programme together with MYOB course performance of students and internship marks significantly explained the overall performance of accounting graduates.
Coordination and cooperation between state universities and the industries in Sri Lanka
(Department of Accountancy, University of Kelaniya, 2015) Kanagasingam, V.
The purpose of this paper is to explore reason for low coordination and cooperation between Management Faculties and other stakeholders in State Universities in Sri Lanka. Theory of communicative action, which theorizes how people communicate, coordinate and cooperate is employed to theories these issues. The finding of the paper shows system, mainly bureaucratic system is being practiced in state universities in Sri Lanka result in lack of coordination and cooperation with other stakeholders, particularly industries. Therefore it is concluded that management faculty failed to coordinate and cooperate with industrialists. This study further indicates the reasons for lack of coordination and cooperation is due to lack of forum to dialogue between academics and industrialist, no trust between them, less commitment to achieve common goals and no recognition of mutual expectation between academics and industrialists. While being the first to theorize the low industrial relation in Sri Lankan state universities, this paper contributes to the research by illustrating how the theory of communicative action can be used to explore issues related to higher education globally.
Assessment in internship – experiences of accountancy degree programme – university of Kelaniya
(Department of Accountancy, University of Kelaniya, 2015) Aruppala, W.D.N.; Jayamaha, A.
Internship has become an important component in accounting degree pragrammes in universities over the past decades. Academics and researchers believe that internship provides smooth transition of undergraduates from oncampus environment to the working environment (Muhamad et al 2009). Further, practitioners in accounting profession have identified that internship experience benefits not only to improve the quality of the degree programme and the skills of the students but also benefits to the employing entity during and after the internship (Beard 2006). Hence, interaction and evaluations among students, faculty and practitioners during and after the internship is invaluable in measuring outcome of the internship programme. Department of Accountancy (DoA), University of Kelaniya, Sri Lanka has introduced internship to the accounting degree curriculum in 1998. DoA believes that the objective of introducing the internship component to Accounting programme is to facilitate students to gain practical exposure from the dynamic business environment, and to enhance teamwork sprit and the employability. To achieve these objectives multiple assessment activities have been introduced in par with the International Accounting Bench Marks designed by Universities and professional institutions, and those activities have been increasingly changed to strengthening the programme. The objective of this paper presents the multiple assessment activities created by DoA in internship pragramme since 1998 to maintain the quality of the accounting degree programme. The assessment activities presented in this article are useful for other accounting pragrammes for improving quality and for accreditation of their degree programmes.
Impact of credit risk management on the performance of commercial banks in Sri Lanka
(Department of Accountancy, University of Kelaniya, 2015) Kodithuwakku, S.
The adoption of credit risk management is becoming a crucial factor for every commercial bank around the world. The objective of this study is to identify the impact of credit risk management on the performance of the commercial banks in Sri Lanka. This study is primarily based on both primary and secondary data. Primary data were collected from eight (08) commercial banks from 24 commercial banks in Sri Lanka. The sample was selected from the population based on the superior financial performance for the period under review and the availability of the consistent data over the set period. The primary data was collected mainly through an interview. The relevant authorities were interviewed personally in order to have their views on the problems and solutions. The secondary data were obtained from various sources such as Annual Reports of the selected commercial banks, relevant articles, books and magazines etc. The panel data of a five year period from 2009 to 2013 from the selected banks were used to examine the relationship between credit risk and performances. The Return on Assets (ROA) is used as performance indicator and Loan provision to Total (LP/TL), Loan Provision to Non-Performing Loans (LP/NPL), Loan Provision to Total Assets (LP/TA) and Non-Performing Loans/ Total Loans (NPL/TL) were used as indicators of credit risk. Further, a regression model was used to establish the relationship between amounts of loan as well as nonperforming loans and profitability during the period of study by using E-views software. The result shows that non-performing loans and provisions have an adverse impact on the profitability. Therefore, the study recommended the banks to implement an effective tools and techniques to reduce the credit risk management.
An empirical investigation of the computerized accounting information systems frauds in licensed banks in Sri Lanka
(Department of Accountancy, University of Kelaniya, 2015) Gunawardana, K.D.
The objective of this paper is to investigate the trends in frauds of computerised accounting information systems in Sri Lankan licensed banks. Sri Lankan licensed banking sector which is the most feasible service industry contributing enormously to the growth of the country. Security controls of Computerise accounting information system in the corporate sector is taken into consideration as this is currently a growing trend around the world. The core objective is to identify the frauds in the computerised accounting information systems in licensed banks in Sri Lanka. Critical reviews of past literature indicate a clear cut connection between fraud deductions in CAIS through security control systems. In order to find out the applicability of this relationship Sri Lanka, research will be undertaken in licence banks in Colombo region. The report consists secondary data which facilitate to achieve the aforementioned objectives. Secondary data analysis the existing computerized frauds in licensed banks as well as existing security control systems in licensed bank in Sri Lanka. However in secondary data analysis it clearly illustrate the computerized accounting frauds have been increased drastically. So licensed banks should have to implement the more security control systems to overcome those problems.
The Impact of Ownership Structure and Ownership Concentration on Financial Performance of Companies Listed on Colombo Stock Exchange
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Rathnayake, A.R.M.B.I.; Weerathunga, P.R.
This study investigates the impact of Ownership Structure and Ownership Concentration on financial performance of Public Companies listed on Colombo Stock Exchange. For this purpose, a sample of 46 top capitalized companies as on 30th August 2016 were selected. Accounting based performance measures of Return on Assets and Return on Equity are used as proxies for financial performance. Ordinary Least Square (OLS) linear Regression model is employed to identify the association between dependent and independent variables. The results of the study reveals that Institutional Ownership, Individual Ownership and Foreign Ownership have not significant impact on financial performance. However, the Ownership Concentration ratios have significant impact on financial performance. All the Ownership Concentration ratios used in this study showed significant impact on the Return on Assets and Return on Equity except the percentage of shares held by first two largest shareholders. This study implies that the majority of the share ownership is held by first five largest shareholders. Therefore, the most of the Sri Lankan companies’ ownership are highly concentrated and it influences to the financial performance.
Investors Perception and Performance of Credit Rating Agencies in India
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Vasan, M.; Yoganandan, G.
Credit ratings agencies play an important role in the development of capital market in India. It protects the interest of investors by forewarning the risks associated with the capital market instruments. In this backdrop, the present study vigilantly analyses the investors’ perception and performance of credit rating agencies. This study is conducted through a survey method among 400 investors. The study found that majority of the investors relatively new to the credit rating based investments and brokers are the major source of information for them. The study also has identified four predominant factors of perception of investors towards credit rating agencies as rudimentary perception on credit ratings, knowledge on rating agencies, knowledge on rating mechanism and knowledge on utility of ratings by using factor analysis. The study also identified factors influencing the performance of credit rating agencies as information attainment, investment decision making, and trustworthiness, forewarning risk and service quality.
Assessing the Factors Influencing Profitability of Listed Hotels in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Begam, A.M.R.
The purpose of this paper was to investigate the factors influencing profitability of listed hotels in Sri Lanka. This study is significant for the developing country like Sri Lanka as a prominent tourist attraction in south Asian region. Sri Lankan government has identified the Tourism sector as a key growth area in the post-conflict development era, with a target of attracting 2.5 million visitors by 2016. Tourism arrival has increased by 160 % since 2009, as the number of arrival was recorded in 2013 was 1.3 mn compared to 0.5 mn in 2009. However, JLL (2016) report reveals that the Average profit per room (Rev per AR) of the hotel industry was showing a decreasing trend. Hence, the objective of the research is to identify the factors influencing the profitability of listed hotels in Sri Lanka. Findings of this research would be useful for the hoteliers to identify the factors influencing the profitability of the firm. Hoteliers can follow the recommended practices to increase the profitability in the hotels. This research was based on secondary data. Secondary data collection focuses on extracts of financial statements of randomly selected 26 listed hotels for last 3 years, i.e. from 2012 to 2015. Financial ratios and financial variables were used to test applicability of independent variables and hypotheses on dependent variables. This study was tested the degree of influence of the independent variables of operational efficiency, investment in training and development of associates, hotel size, investment in research and development and amount of interest bearing loans on the dependent variable of Profitability of listed hotels. Operational efficiency and amount of interest bearing loans were identified as significant variables of influencing the profitability of the listed hotels.
The Impact of Dividend Policy on Stock Price: An Empirical Evidence from Hotels and Travels Companies Listed in Colombo Stock Exchange
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Hettiarachchi, U.S.J.; Rajeshwaran, N.
Dividend Policy is one of the important factors that affect the stock price. Dividend policy is measured by dividend per share, dividend yield and dividend payout ratio. The purpose of this paper is to identify the impact of dividend policy on stock price in the hotels and travels sector companies listed in the Colombo Stock Exchange. Thirty-four companies listed in the hotels and travels sector were analyzed for a period of five years from the year 2012 to 2016. Data were collected from the annual reports of the companies. Statistical Package (SPSS 19.0) was applied to analyze and evaluate the collected data. Correlation analyses and multiple regression are used to explore the association between study variables. A positive impact is found between dividend per share, dividend presence in a firm with stock price changes, while a negative impact between dividend yield and stock price changes is also identified. The impact of dividend pay-out ratio deemed to be insignificant. In addition, it is shown that assets growth rate and firm size explain stock price changes. The study supports the fact that dividend policy is relevant in determining the stock price for the hotels and travels sector companies listed in the Colombo Stock Exchange.
Virtual Learning Environments: Transitioning Student Performance in Accounting at Higher Education Institutes in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Warusavitarana, P.A.; Dona, K.L.; Epitawela, D.D.
This paper discusses how Virtual Learning Environments influence the student performance in Sri Lankan Higher Education Institutes. The technology has made drastic changes in the education sector. Many Higher Education Institutions have shifted from traditional teaching to innovative, student centered teaching and learning methods. Virtual Learning Environments, facilitate learners and the teachers to collaborate and co-create an engaging learning space to develop knowledge and skills. The pilot project explored whether the use of different learning technologies to provide access to online resources and quizzes could improve classroom participation, student engagement, and students performance. This paper presents the insights of the course development, delivery and results from the project, highlighting that the use of learning technologies have increased the learner engagement in the subject content leading to increased student performance in the semester examination across two years.
Data Deluge and Its Analysis Issues
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Wijayatunga, P.
Current availability of enormous amount of data is mainly due to technological advances. They are useful drawing inferences for creating new businesses, formulation of new policies or revising existing ones, etc. However, much of analyses are performed either by subject domain experts implementing mathematical and computational models incorrectly or by mathematical and computational professionals, purely on data driven basis without paying required attention to the subject domain knowledge. Both of these exercises often result in incorrect inferences and therefore they may harm the society, especially when their inferences are used in practice. We argue that, in order to get valid inferences these two parties should work together. Here we briefly discuss some of the issues that the large-scale data analyses should take into account, especially in open data and big data. We also briefly discuss our solutions that are rather simple to implement.
Identify the Market Efficiency of Assets Write down Announcement - A Study on Loss Earned Listed Manufacturing Companies in CSE
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Sooriyakumaran, L.
This research paper examines the market efficiency of loss earned listed manufacturing companies to assets write down announcement and test whether there was semi-strong form of market efficiency available in Colombo Stock Exchange (CSE) under the circumstances. This study attempts to answer the research question of are the loss making companies’ impairment of non- current assets announcements impact to share market? This issue is examined using an overall sample of 62 events relating to 22 listed manufacturing companies covering the period from January 2007 to December 2014. From the events, 12 events were considered to analyse the loss earned 10 listed manufacturing companies market efficiency. The standard Event Study Methodology (ESM) is adopted in order to carry out the study. This study finds that assets write down announcement impact on share prices of loss earned listed manufacturing companies at the level of 01% on the event date. It reveals that CSE has supported to the semi strong form market efficiency which is run on publicly available information on CSE.
The Strategic Perspectives of Market for Accountants: A Case of Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Dabare, G.C.P.
This research study is about the strategic perspective of market for Accountants in Sri Lanka. Sri Lankan Accounting education is consist with both academic and professional education. In Academic education sector for both Government and foreign universities student registration is higher in field of Accounting. Today most of the foreign Accounting education providers are partnering and providing Accounting qualifications for Sri Lankan market. This research is focusing to identified the strategic perspective of market for Accountants. This research is addressing on areas of reason behind why students are more preferred to select Accounting subject than other management subjects in Sri Lanka, what is the reason Engineering and other students are obtaining Accounting qualification in addition to their main career qualification, Level and current demand for Accounting Professional and Academic education in Sri Lanka, Identifying the Industry players offering Accounting education for the Sri Lankan market, what is their history, Nature of the business, current demand, target customer group, current and future strategies for Sri Lankan market, Identifying the most appropriate strategy for market for Accountants in Sri Lanka.
Relationship between Stock Market Performance & Economic Growth: Empirical Evidence from Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Silva, N.K.L.; Perera, P.R.M.R.; Silva, N.L.C.
In general, economic growth is an important factor which helps a country to become strong and prosper than the other nations in the world. Thus the attempt of this study is to identify the relationship between stock market performance and economic growth of Sri Lanka and to analyze how stock market performance affect to the economic growth of Sri Lanka. Quarterly data is collected from Central Bank of Sri Lanka, Department of Census and Statistics of Sri Lanka, and Colombo Stock Exchange for a period of sixteen years from year 2000 to 2015 to follow the analysis where All Share Price Index representing the Stock Market Performance is the independent variable while Real Gross Domestic Product representing the Economic Growth is the dependent variable. Data set is proven to be normally distributed. Econometric technique of simple regression model and correlation analysis were used to analyze the data using SPSS software in order to identify and further explain the relationship between stock market performance and economic growth of Sri Lanka. Findings of the study is parallel with the previous literature that discloses a strong positive relationship between stock market performance and economic growth of Sri Lanka. This study lengthens the literature, providing valued information to economists in developing countries and to the academia.
Accounting System on Polish Local Government in the Context of New Public Management
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Kowalczyk, M.
Accounting of the local government units in Poland has evolved within the last several years mainly and undoubtedly due to introduction of the New Public Management assumptions. The new concept of management implemented in the sector of public finances has significantly influenced on the accounting of local government. The purpose of the herein study is to demonstrate changes to the accounting of local government in Poland, which were caused by introduction of the New Public Management assumptions. On the basis of the research author will try to determine whether the changes introduced to the accounting of local government are beneficial and how they influence on the efficiency of operations. The object of the herein study is the accounting of public finances sector at the local level and the local government constitutes its subject. The article shall be elaborated with the use of literature research to demonstrate the evolution of accounting of local government in Poland within the last several years. The article will constitute of three parts. The first one presents the principles of operations of the local government in Poland. The second part concentrates on the core of New Public Management and its main assumptions. The further part constitutes critical analysis of assumptions of the new management concept on the basis of the literature in subject. The third part describes another changes to the accounting of local government in Poland which are being introduced.