CA Sri Lanka strengthens good governance in accounting profession by adopting NOCLAR

In ensuring that Sri Lanka is in line with the latest international ethics standards, the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) has decided to adopt the “Responding to Non Compliance with Laws and Regulations” (NOCLAR) standard with effect from 15 July 2017.

The announcement was made on Thursday (24 November) by CA Sri Lanka President Lasantha Wickremesinghe, while addressing audit committee members and the board directors at an awareness session on changes to the reporting on audited financial statements, which was held at the institute. 

NOCLAR is seen as an important initiative aimed at safeguarding the accounting profession, enhancing the reputation and respect of professional accountants across the world.

Responding to non-compliance with laws and regulations is an international ethics standard for auditors and other professional accountants. It sets out a first-of-its-kind framework to guide PAs in what actions to take in the public interest when they become aware of a potential illegal act, known as non-compliance with laws and regulations, or NOCLAR, committed by a client or employer. This pronouncement was released by International Ethics Standard Board for Accountants (IESBA) and will be effective internationally from 15 July 2017, the same day that Sri Lanka too will adopt the standard. 

The standard applies to all categories of professional accountants, including auditors, other professional accountants in public practice, and professional accountants in organisations, including those in businesses, Government, education, and the not-for-profit sector. It addresses breaches of laws and regulations that deal with matters such as fraud, corruption and bribery, money laundering, tax payments, financial products and services, environmental protection, and public health and safety.

As a set of ethical standards with global reach, it plays a unique role in supporting the accountancy profession in acting in the public interest.

Lasantha Wickremasinghe said that NOCLAR stimulates greater accountability among organisations, helps protect stakeholders and the general public from substantial harm resulting from violation of laws and regulations, and strengthens the reputation of the profession. He also added that this will position the accountancy profession to play a greater role in addressing financial fraud, money laundering and corruption.

Wickremesinghe also highlighted that this initiative is also in line with the good governance policy of Sri Lanka.

Chairman of the Professional Conduct (Ethics) Committee and member of IESBA Reyaz Mihular, has mentioned that accountants have been permitted to set aside the duty of confidentiality under the Code of Ethics for Professional Accountants in order to disclose NOCLAR to appropriate public authorities in certain circumstances.

The Professional Conduct (Ethics) Committee of CA Sri Lanka will launch a series of awareness programs, in collaboration with IESBA, targeting professional accountants including practicing members, board of directors including audit committees and the general public. IESBA Chairman Stavros Thomadakis expected to facilitate the programs.