Commerce and Management
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Item Sustainable Reporting: An Analysis of Disclosure Practices of Companies in Sri Lanka: Evidence from the Beverage, Food, and Tobacco, Sector(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Wickramasinghe, R.G.D.M.; Munasinghe, M.A.T.K.The main aim of this study is to analyze the sustainability reporting disclosure practices by Beverage, Food, and Tobacco companies in Sri Lanka. In order to achieve this, aim this study analyzed the disclosure practices of 49 companies in the Beverage, Food, and Tobacco sector in Sri Lanka from 2018 to 2022. Data was obtained from the annual reports of the companies and the official website. To analyze the disclosure practices of selected companies were analyzed using GRI standards (2016) and the United Nations Sustainable Development Goals (UN SDGs). based on the findings of the study shows that the extent of sustainability reporting disclosures has significantly risen over the years applying advanced methods for presenting that sustainability information in annual reports. Even if sustainability reporting is a growing trend, there remains a lack of compliance with internationally recognized sustainability reporting guidelines. However, the study shows the lack of local regulatory frameworks and external assurance mechanisms in Sri Lanka which doubts the credibility and completeness of the information disclosed. This study suggests that providing more education and training for employees and executive-level personnel, especially those involved in preparing financial reports, and increasing the involvement of regulatory bodies and professional institutions is vital for overcoming these issues.Item Evaluation and Analysis of SDG Reporting: Evidence from Banks in Sri Lanka(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Silva, A.A.G.K.; Munasinghe, M.A.T.K.The SDGs are not just goals for governments; they are a call to action for everyone to play a part in creating a more sustainable future. Companies in Sri Lanka's banking industry are increasingly incorporating sustainable development goals (SDGs) into their operations, altering the way they conduct business. This shift is driven by the potential to gain a competitive advantage over rivals. While the annual reports contain information about the Sustainable Development Goals (SDGs), it's hard to assess their progress based on these reports alone. To enhance corporate contributions to the Sustainable Development Goals (SDGs), this study encourages the adoption of a proven scoring system, the GRI framework, to evaluate and report on SDG progress. The ultimate aim of this study can be identified by evaluating Sri Lankan banking sector companies’ efforts toward achieving SDGs through their disclosure of SDGs to motivate companies to make meaningful strides toward achieving the SDGs. The study selected Sri Lankan banking sector companies (according to the GICS classification) that were listed on the Colombo Stock Exchange (CSE) as the sample firms and, accordingly, the study utilized the annual reports of Sri Lankan banking sector companies from 2018 to 2022 as the main source of information. In addition to the annual reports, it made use of websites, magazines, and other publications published by Sri Lankan banking sector companies. The study adopts content analysis as the research methodology to evaluate the extent of SDG reporting by the Sri Lankan banking sector companies (according to the GICS classification).Item Analysis of the Key Audit Matters and Revealing the Underlying Causes: Evidence Gather from Listed Banking and Insurance Companies in Sri Lanka(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Sandaruwani, S.A.D.R.; Munasinghe, M.A.T.K.Global financial scandals and crises have placed the auditor's role into greater attention, especially regarding the value of the data in audit reports. The traditional audit report is not adequate due to its standardized format, which is considered by financial stakeholders as uninformative. This perception caused the establishment of global audit standards. One of the most recent changes is that the International Auditing and Assurance Standards Board (IAASB) published ISA 701, which requires auditors to report "Key Audit Matters" (KAMs). In the Sri Lankan context, the Auditing standard was introduced as SLAuS 701. The primary objective of this study is to analyse the Key Audit Matters of both banking and insurance companies listed on the Colombo Stock Exchange (CSE) and to find the identifying the underlying root causes that may not be covered. In this research study analysed, KAMs identified in audit reports of both banking and insurance companies listed in CSE over the period of 2018 to 2022 using the content analysis method. According to the findings of the study, it can be identified that the majority of KAMs disclosed under the areas of impairment of financial instruments and information technology systems and controls over financial reporting in the banking sector and the area of insurance contract liabilities in the insurance sector. Based on the results of this study, it can be identified that the underlying root cause behind those disclosed KAMs was it represent a significant portion of a particular company’s financial position, and this amount was calculated mainly based on the assumptions and estimations. Therefore, there is a significant impact on the financial position of the company. This research study found different kinds of estimation methods and calculation methods as well.Item The Role of Capital Structure on Profitability during the Financial Crisis: Evidence from Financial Firms Listed in CSE(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Nawarathna, N.H.M.S.V.; Munasinghe, M.A.T.K.Capital structure is considered as an important corporate financial management context and is mainly related to establishing an ideal credit policy. In the context of a financial shock, financial firms were severely affected. This study examines the role of capital structure on profitability during the financial crisis of listed financial firms in CSE. The study adopts a quantitative research design, and the study is based on secondary data collected from annual reports. Researchers use positivist philosophy for the research and deductive method use as research logic. The population of this study is all financial firms listed on the Colombo Stock Exchange. To perform the study, 20 financial firms were selected as the sample from 2004 to 2018. The results reveal that the CS of the current period has a negative relationship with profitability in the light of the financial crisis. Furthermore, the study's findings, the Debt-to-equity ratio, Debt to Assets Ratio, and Interest Coverage ratio negatively impacted the profitability of the financial firms during the crisis period. Managers and shareholders may find these findings significant, particularly when they place a high priority on their decision about the role of capital structure on a company's financial profitability during the financial crisis.Item Cost Control Measures and their Impact on the Profitability of Listed Manufacturing Companies in Sri Lanka(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Nawarathna, K.G.N.M.S.D.; Munasinghe, M.A.T.K.This study aims to examine the impact of cost control on the profitability of listed manufacturing companies in Sri Lanka with a survey study conducted using five selected listed manufacturing companies in Sri Lanka to provide a critical assessment of the need for and importance of cost control. This study used primary data obtained from five companies that have been in the apparel and fabric industry for many years among the thirty-seven listed manufacturing companies in the Sri Lanka stock market currently operating as manufacturing companies. Descriptive and analytical research design tools are used to examine the effect of some key variables such as budgeting, standard costing, internal and external costing, marginal costing, and so on. Survey data from five manufacturing companies were analyzed using various statistical tools. Hypothesis testing was done to find the relationship between independent variables and increase research quality. Data was collected by distributing a structured questionnaire to the management and employees of the respective company. The findings of the research show that cost control tools have a positive relationship with profitability. Moreover, the lack of adequate resources to apply cost control tools in manufacturing companies in Sri Lanka has created a more challenging situation. Therefore, the research found that all the above cost control instruments contribute greatly to controlling costs and increasing the profitability of organizations, among which marginal costing is recommended to be used as the most appropriate cost control instrument. As a result, companies will maximize value and control costs in the coming days.Item Uses of Technology on Financial Statement Fraud Detection(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Munasinghe, S.T.D.; Munasinghe, M.A.T.K.This study explores how technology is used by audit professionals in major consulting firms, specifically focusing on KPMG, EY, and Deloitte, and its influence on detecting financial statement fraud. The research aims to grasp the practical application, advantages, and challenges related to Computer-Assisted Audit Tools (CAATs). Objectives include understanding software usage, evaluating perceived benefits, and exploring the impact of performance expectancy, facilitating conditions, and technological challenges on financial fraud detection. To gather data, 131 audit professionals were surveyed using a structured questionnaire, and the data were analyzed with SPSS 27. Demographic analysis reveals a significant representation from EY, and all respondents possess basic information technology skills. Software usage is diverse, with Microsoft Excel being the most frequently used software, while ACL, Power BI, IDEA, and In-House Applications show varying usage frequencies. Respondents widely agree on the benefits of CAATs, such as cost reduction, timely task completion, increased accuracy, improved staff performance, and effective fraud detection. Preliminary Testing confirmed the validity of data, and regression analysis showed significant impacts of software types, perceived benefits, facilitating conditions, and technological challenges on fraud detection, while Performance Expectancy had minimal influence. Key findings underscore the importance of software types, perceived benefits, facilitating conditions, and technological challenges in improving fraud detection. The study emphasizes the necessity for tailored approaches to technology adoption in audit practices. In summary, this research contributes valuable insights, offering guidance to auditors and firms in maximizing the use of technology for efficient financial statement fraud detection.Item Students’ Perception of Forensic Accounting Education: A Case Study of the University of Kelaniya, Sri Lanka(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Malshani, K.M.G.K.H.; Munasinghe, M.A.T.K.It is interesting to note that six state universities have started to incorporate forensic accounting education into their accounting programs to fulfill the demands of today’s competitive industry in Sri Lanka. The University of Kelaniya initiated a specialized forensic accounting degree program in 2017, the first in Sri Lanka. There are four batches of students enrolled in the auditing and forensic accounting degree program at the University of Kelaniya. However, what students think of the forensic accounting degree program has not yet been studied. Therefore, this study aims to explore their perceptions about the forensic accounting degree program. Data was collected from 40 students in the 3rd and 4th year of the forensic accounting degree program at the Department of Accountancy, University of Kelaniya. The analysis is done through a thematic analysis of the semi-structured interviews with 40 students. The study data were analyzed using NVivo software version 14. Findings show that students perceive forensic accounting education as very important for them. This study also found that forensic accounting students developed the required skills and knowledge of forensic accountants through their degrees. However, the author identifies two problems: skills deficiency and the gap between theory and practice in forensic accounting education. The respondents provided suggestions to fix these problems through different means, such as promoting awareness, providing forensic internships for all forensic accounting students, introducing forensic accounting software, implementing forensic accounting standards, and arranging workshops for all students. The findings can be used by different stakeholders (including practitioners, prospective students and educators) to improve forensic accounting education in Sri Lanka.Item Evaluation and Analysis of SDG Reporting: Evidence from Listed Manufacturing Companies in Sri Lanka(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Gamage, M.G.S.K.; Munasinghe, M.A.T.K.The Sustainable Development Goals of the United Nations are now a key framework for resolving important issues in society, the economy, and the environment as humanity moves towards a more sustainable future. Sustainable development goals are already included into corporate processes and are changing the types of movement for entities. Due to the opportunity for obtaining an advantage over their competitors, Sri Lankan companies in the manufacturing sector are becoming more and more concerned with sustainable development goals. Although, the annual reports provide information on the Sustainable development goals. But, it is not possible to evaluate them after reviewing the annual reports. Therefore, the purpose of this study is to motivate them to move forward through turning the Sustainable development goals disclosures into a score. This study is conducted by analyzing the content of annual reports, websites, and magazines issued by listed manufacturing companies in Sri Lanka. The sample includes 46 food, beverage and tobacco, listed manufacturing companies for five years from 2018 to 2022. Qualitative content analyses are used to determine the nature of company responses to SDG and encourage them to move forward in a competitive marketplace. The findings indicate that food, beverage and tobacco listed manufacturing companies initially only declared a small number of SDGs, but today they typically publish over 12 of the 17 goals in their annual reports, and their strategies emphasize their commitment to these goals and today many companies of manufacturing sector have advanced in terms of SDGs. During the early reporting periods, companies released more information detailing the specific SDGs, but now less information regarding the sustainability impacts of the SDGs. Companies have followed GRI guidelines when reporting relevant information, including more photos and graphs in addition to narratives. There aren’t many publications in Sri Lanka about how companies are working towards the SDGs. By focusing on how companies provide SDG- related information, relate it to SDG- focused programs, and motivate them to move forward in the competitive world of business, this study offers some answers to that issue. Furthermore, this study proposes that further research be done on the use of sustainable strategies.Item Empirical Analysis of Audit Opinions of Listed Companies in the Manufacturing Industry During Economic Crisis(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Dayawansha, W.N.S.D.; Munasinghe, M.A.T.K.This study aimed to examine the companies’ Audit opinion responses to the COVID-19 pandemic by reviewing information disclosures in the company’s annual reports. Manufacturing companies have been selected for the sample, including the Consumer discretionary and consumer staple sectors. The sample of this study includes the annual reports of 100 listed manufacturing companies in Sri Lanka that published Audit opinions for six years during 2017-2022. The pre-and post-COVID situation was identified by taking 2020 as a benchmark, since the first patient reported in March 2020 in Sri Lanka. Qualitative content analysis was used to analyze the information contained in the reports to recognize the significant effects and key audit matters after using a checklist. Audit opinion type, Auditor type, and Significant key Audit matters have been analyzed through this investigation. As per the analysis of audit opinions, it does not change with the COVID situation, (the majority of the audit opinions are unqualified), but auditors are more likely to issue Going Concern Audit Opinions in response to COVID. However, most of the companies have faced going concern issues during the COVID situation. The main findings are that companies intend to have a going concern issue in their company in COVID 19 period, companies’ ability to continue as going concern basis, and management’s assessment of the probable impact of the COVID-19 pandemic on the operations of the company were significant and unique key audit matters in response to the COVID pandemic. Even if the company has a going concern issue, companies have decided to continue their operations with the financial support of their parent company. Other reasons are also mentioned in this study, in addition to the fact that hotel and plantation companies are facing going concern issues during this COVID-19 period.Item The Use of Computer-Aided Audit Tools in Forensic Auditing in Sri Lanka(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Suheina, M.S.F.; Munasinghe, M.A.T.K.The present rapid speed of technology innovation presents challenges to the global business environment. Because most organizational operations are becoming heavily automated, internal auditors face a difficult work environment. Computer Assisted Audit Techniques (CAATs) are seen by auditors as having the potential to improve the efficacy and efficiency of their job. Recent research, however, indicates that auditors especially forensic auditors have less of a tendency to employ CAATs. Therefore, the purpose of this study is to determine the key factors influencing the degree of CAAT adoption among Sri Lankan forensic auditors. Additionally, the study seeks to determine how much such factors influence internal auditors' adoption of CAATs. Significant concepts were found that relate to the well-known Unified Theory of Acceptance and Use of Technology (UTAUT) paradigm, which was created in the field of information systems. Information was gathered from 46 forensic auditors who work in audit firms with forensic divisions and who conduct forensic audits. The data obtained was statistically analyzed using SPSS software. Multiple regression analysis, correlation analysis, and descriptive statistics were used to analyze the data. The findings show a strong beneficial influence from performance expectations and facilitating conditions while effort expectancy and social influence were not. The findings revealed that the most used CAAT in forensic audit in Sri Lanka is Excel. Further, the findings imply that audit companies should foster a positive work environment by putting in place appropriate regulations, increasing managerial and technological infrastructure investments, and thus encouraging auditors to use CAATs.