Sri Lanka auditors to flag violations of laws and rules to SEC: Chairman – EconomyNext

Sunday April 2, 2023 3:45 pm
Sunday April 2, 2023 3:45 pm
ECONOMYNEXT – Auditors of listed companies should flag breaches of rules or directions to the Sri Lanka Securities and Exchange Commission if listed companies or market intermediaries do not take timely action, newly appointed Chairman Faizal Salieh had said.
Auditors first have to report non-compliance or breach of a rule, law, regulation or regulatory directive under the SEC Act, a fraud or irregularity which has a material impact on the company to the Audit Committee.
In the Audit Committee fails to take action within two weeks, the auditor is required under the Act to inform the Board of Directors. If no action is taken by the Director Board within two weeks, the auditor should red flag it to the SEC.
The internal control environment of companies should also be looked into.
“In order to establish a fair, orderly and transparent capital market it is important that the whole gamut of a company’s governance and risk management structures and processes are rigorously audited,” Salieh was quoted as saying at a meeting with Auditors.
A news SEC Act had classified Auditors as “Supplementary Service Providers” to the SEC and Colombo Stock Exchange.
Auditors are responsible for verifying and assuring the accuracy of financial reports and overall compliance of listed companies, market institutions and intermediaries.
Auditors of Market Intermediaries also have a reporting obligation to the Colombo Stock Exchange Board in the case of a breach or non-compliance of rules.
The CSE should be promptly informed if the auditor is aware of a situation that adversely affects the financial position of a Market Intermediary to a material extent.
The Audit Committee, the Board of Directors should be informed by a written report on a matter affects the financial position of the entity to a material extent.
Any breach of the law, rules or directives, fraud or an irregularity that has or may have a material effect on the accounts of the entity or that of the funds or property of investors in securities should be reported.
Auditors are also obligated to send a copy of such reports to the SEC.
The Sri Lanka Accounting Auditing Standards Monitoring Board was in charge of analyzing accounts of the entities.
Salieh had requested SLASSMB to share any significant findings from their monitoring activities with the SEC’s Supervision Division. (Colombo/ April02/2023)
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Monday April 3, 2023 12:26 am
Monday April 3, 2023 12:26 am
ECONOMYNEXT – Sri Lanka expects discussions on GDP linked bonds and the possibility of future economic growth being higher than projected in a debt sustainability analysis done by the International Monetary Fund, bond holders were told in a presentation.
The possibility of GDP being higher than projected by the IMF will be discussed at upcoming talks with private creditors, a representative of Sri Lanka’s financial advisors told an online meeting with commercial creditors.
The person was responding to a question on “What is the likelihood of external debt re-structuring being linked to external debt re-structure?”
As part of the negotiations, it will be discussed “what if the country performs better than expected”, the advisor said.
“There will be a number of discussions from creditors for sure,” the advisor said.
The IMF had projected growth of 3.1 percent for the next few years, which Central Bank Governor Nandalal Weerasinghe characterized as “conservative”.
Sri Lanka believes that the country can “overperform” on economic growth, but it was too early to say whether it would be 4 to 5 percent or higher, he said, responding to creditor online queries.
Some private creditors are said to be discussing the possibility of offering to take so-called ‘downside’ bonds where a bond exchange is made on a more optimistic forecast and cash flows will fall if growth falters to 3.1 percent.
There have been ‘upside’ instruments used in the past, to which sovereigns have agreed. The instruments used so far had not been bonds, but a type of warrant.
Sri Lanka registered higher levels of growth than 3 percent during a 30-year war.
However, in peacetime growth faltered as inflationary open market operations unleashed to suppress rates and generate 5 percent inflation and also output gap targeting (monetary stimulus), under flexible inflation targeting, triggering a series of currency crises and eventual external default in 2022.
Forex shortages or balance of payments deficits, a problem associated with pegged central banks, emerge when external and domestic monetary anchors conflict (typically attempts to operate both money and exchange policy).
Sri Lanka’s intermediate regime central bank has denied monetary stability and a stable foundation for people to grow the economy  for 73 years by suppressing interest rates through inflationary open market operations or targeting the yield curve by purchasing bonds in and out of auctions.
Instead of restoring monetary stability, the money producing monopoly went beyond legal tender laws to enact exchange controls. The central bank has in the past egged the Treasury to impose import controls, through a law enacted in 1969 after triggering forex shortages.
Sri Lanka dropped a consistent policy peg in March 2023 and moved to an ad hoc peg or a flexible exchange rate.
According to the IMF’s core monetary program (Performance Criteria) forex reserves of 1.4 billion US dollars should be collected in 2023 while running the ad hoc peg, with no obvious mechanism to deal with the liquidity created from any central bank dollar purchases.
There is also a double digit inflation target, leaving room for renewed currency instability, regressive inflation taxes on the poor through depreciation, social unrest and low growth. In a further complication, IMF money could also be used for budgetary purposes.
The liquidity impact of such operations or any counter actions are not known. (Colombo/Apr03/2023)
Sunday April 2, 2023 10:35 pm
Sunday April 2, 2023 10:35 pm
ECONOMYNEXT – Sri Lanka’s High and Medium Growns prices were down while Low Grown prices were slightly up at an auction on March 29, amidst to limited activity with the Ramadan festival and restricted purchases due to the end of the financial year.
Total auction volume was 5.1 million kilograms and there was good general demand, Forbes and Walker tea brokers said in a report.
The weekly sale average fell to 1271.28 rupees from 1282.01 rupees a week ago, according to data.
High Growns
The High Grown sale average was down by 25.87 rupees to 1,308.98 from 1,334.85 rupees last week, Ceylon Tea Brokers said.
Ex-Estate offerings were fairly similar to last and totaled 0.74 million kilos
Overall quality in regard to teas in the Western and Nuwara Eliya planting districts were barely maintained, whilst the others were fairly similar to last, Forbes and Walker said.
BOP prices fell by 50 rupees, PF! Prices fell by 30 rupees while the price of BOPF fell by 100 rupees per kilo.
Teas at the lower end of the market often sold around last week’s levels although towards the close prices tend to weaken marginally.
Low Growns
The average price of Low Growns fell 6.75 rupees to 1,300.28 rupees.
Price if FBOP fell by 150 rupees, FBOPF1 fell by 100 rupees and PEK1 fell by 200 rupees while OP1 grew 50 rupees per kilo.
The market met with fair demand at lower levels, particularly for the well-made teas. However, the teas at the bottom continued to sell well, Forbes and Walker said.
Low Growns comprised of 2.2 million kilograms.
In the Leafy and Semi Leafy catalogues, OP1’s in general were steady. Well-made BOP1’s remained firm, whilst the teas at the bottom fell.
Well-made OP/OPA’s in general eased, whilst the teas at the bottom were firm.
However, smaller OP varieties declined substantially. PEK/PEK1’s, in general, declined.
Medium Growns
The Medium Growns sale average fell 8.53 rupees to 1,118.69 rupees last week.
BOP1 fell 50 rupees per kilo while OP1 and OP/OPA grew by 40 and 50 rupees respectively per kilo.
PEK/PEK1’s in general fell by 50-100 rupees per kilo and more at times.
Well-made FBOP/FF1’s together with cleaner below best sorts were selectively grew.
Others at the lower end were down. (Colombo/April2/2023)
Sunday April 2, 2023 9:09 pm
Sunday April 2, 2023 9:09 pm
ECONOMYNEXT – MOZBrands, a Sri Lanka start up, said it is taking hand woven fabric to the premium necktie market, helping a traditional industry to cater to modern needs.
“Although Sri Lanka has a 2,500 year history of hand weaving, including unique Dumbara weaving tradition, the handloom industry has not diversified and grown to cater to modern needs,” the company said.
“MOZ has developed unique fabrics using traditional weaving techniques in collaboration with the Department of Textile Industries.”
To develop a premium brand, unique or specialist fabrics and designs are needed.
Handloom s as the potential to make small quantities of specialist fabrics.
Indika Hettiaracchi, founder of MOZBrands says there are hundreds of different weaves in handlooms that are rarely used.
MOZ Heritage Neckties closely resemble Italian Grenadine neckties, he said.
MOZ is currently experimenting how to make neckwear fabrics using 100 percent natural yarn to produce all natural yarn neckwear targeting the premium international market.
The global neckwear market is estimated at 5.7 billion in 2022 and expected to grow close to 5 percent per year.
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