Symposia & Conferences
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Item The Impact of Audit Quality on Financial Reporting Quality: Evidence from Sri Lanka(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Weerasekara, W.A.P.S.; Bandara, R.M.S.The quality of the audit has been vital since accounting scandals like WorldCom, Enron, wire card scandals, and other risks have happened in the past. This is because auditors offer third-party assurance regarding the financial information of organizations. Then, Stakeholders mostly depend on the financial statements published by organizations when making decisions. As a result, stakeholders are becoming increasingly concerned regarding the accuracy of financial reporting. It is therefore necessary to examine every way in which audit quality affects the quality of financial reporting. Hence, this study mainly focuses on examining the impact of audit quality on the financial reporting quality of S&P Sri Lanka 20 index companies from 2013 to 2022. The sample of this study consisted of 15 non-financial companies, excluding the rest of the companies from the population due to their special nature. Further, this research used the data of companies’ annual reports, which were extracted from the CSE website. Audit firm size, audit firm tenure, and audit fees are used as surrogates for audit quality (AQ). While earnings management is a surrogate for financial reporting quality (FRQ), which is the dependent variable, FRQ is measured through discretionary accruals. Then, the Results provided that audit firm size (AFS) has an insignificant impact on financial reporting quality (FRQ), as it was not supported by my first hypothesis. However, audit firm tenure (AFT) has a significant negative impact on financial reporting quality (FRQ). Moreover, it recommends that to raise the FRQ, the AFT should not be exceeded for longer than three years. On the other hand, audit fees (AF) showed a significant positive impact on financial reporting quality (FRQ). It indicates that higher audit fees result in improved FRQ. Then, the results of this study help to improve investor trust in the decision-making process and give authorities guidance on where rules and regulations need to be updated.Item The Impact of Cash Conversion Cycle on Firms Profitability Before, During and After Covid-19 Pandemic: Evidence from Listed Hotels in Sri Lanka(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Ranasinghe, R.A.R.H.; Bandara, R.M.S.Efficient working capital management ensures the company’s operations are smoothly continuing by effectively managing company inventory, receivables, and payables. The hotel sector is regarded as the most consummate sector for the Sri Lankan economy due to it has come up with unorthodox strategies to increase income fleetly, decrease direct and overhead expenses, and set itself up for higher future aggrandizement. Also, most of the Sri Lankan hotels must primarily depend on internal cash flows to pay current liabilities and capital growth. The study's specific research goal is to investigate the impact of the firm's cash conversion cycle on its profitability in publicly listed companies in the hospitality sector and the effect of each component of CCC on the profitability of publicly listed companies in the hospitality sector in Sri Lanka. Methodology using a quantitative approach verifies hypotheses and makes necessary corrections at the study’s conclusion. Moreover, cross-sectional data from 2018/19 to 2021/22, except 2020/21, is used in quantitative methods, which consistently use a larger sample size than qualitative methods. The analysis done during the during-COVID-19 period identified the Probability F statistic 0.001which conveys that there is 0.05 significance and the explanatory power of the regression model during the COVID-19 shows 46% which also appears that there is a significant impact from the cash conversion cycle on firms’ profitability and businesses need to be more concerned about CCC during crisis period since it can lessen reputational harm by giving stakeholders accurate and timely information.Item Combating Money Laundering: Effectiveness of Measures Taken by Sri Lankan Banks to Comply with Regulatory Frameworks(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Perera, A.K.S.S.; Bandara, R.M.S.Money laundering poses ongoing challenges for countries across the globe. The complexities associated with these challenges vary from one country to another, primarily due to factors such as the unique nature of their financial sectors, the specific anti-money laundering (AML) icies they have adopted, and the capabilities of their central banks in devising a comprehensive framework to address these issues effectively. To overcome these challenges and establish robust AML policies, each country must develop its framework through its central bank. This framework should aim to eliminate obstacles and enhance the effectiveness of the country's AML efforts. To accomplish this, careful identification and inclusion of relevant factors is essential. The paper aims to assess the effectiveness of measures taken by banks in Sri Lanka to comply with regulatory frameworks in combating money laundering. To do so mainly three areas are being considered such as commitment towards legislative compliances, adequate tools and devices, and employee training. To collect data a questionnaire was sent to banks of Sri Lanka and 117 responses were received the questions mainly targeted the executives and managers working at banks of Sri Lanka. SPSS statistics software was used for the data analysis part and a regression model was run considering the assumptions for to run regression model the results of the research showed that the banks of Sri Lanka are committed to legislative compliance and do have adequate tools and devices and do sufficient employee training. Apart from that research also identified that there are constraints that banks face when adapting technological advancements and international collaboration is not up to standards, so recommendations were provided such as investing in continuous technological advancements to stay competitive and aligned with global AML technological standards, AI and machine learning tools, such as natural language processing and predictive analytics, can vastly improve the effectiveness and efficiency of AML and Know Your Customer (KYC) programs by automating complex tasks, identifying patterns, and reducing false positives. The research focuses on assessing the effectiveness of measures in the banking sector in Sri Lanka, excluding non-banking financial institutions. It examines compliance requirements in employee training, legislative compliance commitment, and adequate tools. The study's scope may be limited by data availability, resources, and participant access.Item The Impact of Environmental Sustainability on Financial Performance in the Food, Beverage, and Tobacco Industry in Sri Lanka(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Madhuwanthi, P.V.D.S.; Bandara, R.M.S.This study investigates the Impact of Environmental Sustainability (ES) on Financial Performance (FP) in the Food, Beverage, and Tobacco (FBT) industry in Sri Lanka. Sustainability, as defined by Clough (2006) and Tatlici and Sertyesilisik (2019), involves meeting present needs while preserving the ability to cater to future generations. The study focuses on the Economic, Social, and Environmental dimensions of sustainability, emphasizing ES as a systematic process of economic activities bound by environmental constraints. Rapid global expansion and technological advancements in international trade have heightened environmental concerns, evident in rising CO2 emissions and health risks. Firms worldwide, including in Sri Lanka, are adopting ES practices, often disclosed through ES reporting. Despite the costs, firms anticipate long-term benefits, both financial and non-financial. This study centers on ES practices' impact on FP, crucial in any business firm. The researcher selects the FBT industry due to its categorization under Consumer Staples and its association with pollution. FBT firms must adhere to ES rules, incurring additional costs to maintain profitability. The investigation aims to fill the research gap on the ES-FP link in the FBT sector, considering the industry's unique challenges. The research question explores the impact of ES on FP in the FBT industry, with objectives to measure and analyze this relationship. The significance lies in providing empirical evidence on the ES-FP connection, aiding decision-makers in the industry, guiding policymakers, and supporting sustainable development goals. The study addresses limitations, emphasizing the need for a larger, more varied sample and cautious consideration of industry-specific factors.Item The Impact of Firm-Specific Factors on Environmental, Social and Governance Reporting in Sri Lanka: Evidence from Listed Manufacturing Sector Companies of Colombo Stock Exchange(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Madhuwanthi, M.N.G.G.H.; Bandara, R.M.S.The main aim of this study is to identify the impact of firm-specific factors on Environmental, Social, and Governance Reporting (ESG) in manufacturing sector companies in the Colombo Stock Exchange (CSE). This paper analyses the relationship between some firm-specific factors and the Environmental, Social, and Governance Reporting in manufacturing sector companies in CSE. This study was based on 29 listed manufacturing sector companies in CSE. The ESG Disclosures in annual reports of the 29 listed companies for the past five years (2018-2022) were analyzed. The state of Environmental, Social, and Governance reporting for each company for each year was computed GRI disclosures included in annual reports using a scoring system developed by Dragmoir (2010) inspired by the GRI guidelines and multiple regressions were conducted to identify the relationship between firm-specific factors and ESG Reporting. Based on this study's research findings, Market Performance and Size of the company positively impact Environmental, Social, and Governance reporting of manufacturing sector companies in CSE. The profitability of the company and Leverage harms the Environmental, Social, and Governance Reporting of manufacturing sector companies in CSE. This research limited only four variables of firm-specific factors and one industry group of the Colombo stock exchange. To the best of the knowledge of researchers, there has been no study conducted before that verifies the Firm Specific Factors' impact on Environmental, Social, and Governance Reporting of manufacturing sector companies in CSE.Item The Impact of Working Capital Management on Profitability in SME Enterprises within Sri Lanka's Western Province: A Comparative Analysis across Post, and During the COVID-19 Pandemic Periods(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Hansani, A.M.P.; Bandara, R.M.S.Especially the COVID-19 pandemic has had a greater effect on the business world. Considering this, the purpose of this study is to determine how WCM impacted firm Performance before and during the Covid-19 pandemic in Sri Lanka. All businesses have regarded working capital management as a helpful tool. Working capital management is crucial for the company to succeed. For businesses to be sustainable, working capital management must be at its best. WCM's objective is to make sure that the company can carry on with its operations and has enough cash flow to pay down maturing short-term debt as well as anticipated operational expenses. Depending on the industry, WCM may vary. So, this study investigates how COVID-19 impacts the relationship between WCM and the business performance of Sri Lanka's SMEs companies. The study's goals are to assess how working capital management affects firm Performance and to determine how COVID-19 has affected both working capital management and the Performance of SMEs. 54 SMEs that were during the years 2020 and 2022 make up the sample. Accordingly, Audited financial reports were employed to collect secondary quantitative data for this study. While Performance was measured by Return on Assets (ROA), the WCM was quantified in terms of Inventory Turnover Period (ITP), Average Collection Period (ACP), and Average Payment period (APP). The data shows that ITP has a substantial negative influence on the ROA, while APP has a significant positive impact. The study also discovered that the ACP has no significant impact on the firm's Performance. Findings on the effect of COVID on WCM showed that the organization was significantly impacted by the pandemic scenario in the nation and that their Performance in the SMEs sector was during and post COVID.Item A Study on the Skills and Knowledge Expected by Employers from Forensic Accounting Interns in Sri Lanka(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Dilshan, H.A.C.; Bandara, R.M.S.The main objectives of this study were to determine the levels of importance of Skills and Knowledge expected by employers from forensic accounting interns in Sri Lanka and to investigate whether there is an expectation gap between the skills and knowledge that interns think they have and the skills and knowledge that employers expect them to have. To achieve the first and second objectives of the study, the target population for this study was those who are in the field of forensic accounting profession such as certified fraud examiners, chartered accountants in business and public practice, lawyers in the forensic field, etc. (supervisory level and above). For the second objective of the study, the target population was forensic interns who are currently pursuing a Bachelor of Business Management (Honours) in Auditing and Forensic Accounting while working as interns in the audit and non-audit sectors. As findings, Fraud Risk Assessment, Deductive analysis, Diagnostic, and Critical Thinking skills were the highest-ranked skills, whereas the least-ranked skill was marketing; and, the highest-ranked knowledge area was accounting, whereas, the least-ranked knowledge area was taxation. Also, Deductive Analysis, Diagnostic, Fraud Risk Assessment, and Critical Thinking skills were the skills that had the highest gaps between the employers’ expectations and the forensic interns’ self-assessments. For the knowledge side, it was noted that Discovery Information gathering and preservation knowledge are not up to the expected level of forensic employers from the forensic interns’ side. Therefore, it is recommended that the curriculum should be amended to bridge those expectation gaps.Item The Impact of Financial Reporting Quality on Investment Efficiency in Sri Lanka: Evidence from Listed Firms in Colombo Stock Exchange(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Bhagya, W.C.; Bandara, R.M.S.One of the most essential functions of financial reporting is to help organizations make better investment decisions. The relationship between the financial reporting quality and investment efficiency, overinvestment, and underinvestment is complex and diverse. Financial reporting quality relates to a company's financial information's accuracy, openness, and dependability. The primary goal of this research is to determine the relationship between financial reporting quality and investment efficiency, overinvestment, and underinvestment in a sample of 30 companies with 270 firm-year data between 2014 and 2022. This study is based on secondary data gathered from published annual reports of listed companies in the Consumer Service Industry, Diversified Financial Industry, and Food, Beverage, and Tobacco Industry. The data in this study was analyzed using descriptive statistics, correlation analysis, and regression analysis. The study's findings revealed that in Sri Lanka, there is a positive relationship between financial reporting quality and investment efficiency, as well as a negative relationship between financial reporting quality and overinvestment and underinvestment.Item Challenges of IFRS Convergences of Insurance Industries in Sri Lanka(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Premarathna, H.S.M.; Bandara, R.M.S.The Institute of Chartered Accountants of Sri Lanka (CASL) committed to convergence International Financial Reporting Standards (IFRS) with effect from 1st January 2012. The convergence have been generated significant challenges and problems on financial reporting in the terms of recognition, measurement, disclosures on accounting policies, consolidation and reporting to the insurance companies operated in Sri Lanka. This research highlights the challenges in convergence of IFRS in Sri Lankan insurance sector and the possible ways to overcome those challenges. The qualitative method was used for the study based on both primary and secondary data gathered from interviewing of selected insurance companies and annual reports. The measures taken by CASL and the other regulatory bodies to facilitate the smooth convergence to IFRS were admirable. The remedial actions such as consulting reputed audit and advisory firms relating to IFRS issues, giving foreign learning opportunity to the accounting staff to obtained the IFRS knowledge, the knowledge of IFRS on newly recruited accounting staff have been taken to overcome the problems and challenges.Item Impact of Credit Risk Management on Profitability of Licensed Finance Companies in Sri Lanka(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Madusanka, A.P.; Bandara, R.M.S.The Licensed Finance Companies (LFCs) sector plays a prominent role within the financial system in Sri Lanka. LFCs are dealing with massive loan portfolio in the country and credit risk is one of the most significant risks which is faced by LFCs. The main purpose of the research is to investigate impact of credit risk management on profitability of LFCs in Sri Lanka. In the research model, Return On Assets (ROA) and Return On Equity (ROE) are the indicators for Profitability of LFCs, and Gross Non- Performing Loans (GNPL), Provision for Loss Facilities / Credit Facilities ratio (PLFCF), Total Credit Interest/Credit Facilities ratio (TCICF), Credit Recovery Cost/Credit Interest ratio (CRCCI), and Capital Adequacy Ratio (CAR) are indicators for credit risk management. The research collected data from 30 LFCs in Sri Lanka from 2011 to 2016 and formulated five hypotheses to achieve the research objective. A series of statistical tests were performed in order to test the impact of credit risk management on profitability of LFCs in Sri Lanka. Results disclosed that there is a significant negative impact of the credit risk indicators of GNPL and PLFCF on profitability of LFCs in Sri Lanka and Overall findings revealed that there is significant impact of credit risk management on profitability of LFCs in Sri Lanka. This finding indicates that the better the credit risk management is, the higher the profitability to the LFCs in Sri Lanka.