Thilak Karunaratne

The Chairman of the Securities & Exchange Commission of Sri Lanka, Thilak Karunaratne last week said the SEC is exploring the possibility of placing a legal audit duty on whistleblowing to report any irregular or improper conduct by the regulatees to further enhance auditor oversight. Accordingly, he said the SEC believes that there should be full, timely, and accurate disclosure of financial results and other information that is material to investor decisions in pursuit of ensuring that markets are fair and transparent.

“As this process is accepted by all the major audit firms I sincerely hope that their local associates will also fall in line,” Karunaratne said at the launch of the implementation guide on Integrated Corporate Reporting developed by the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka).

From a regulatory perspective, Karunaratne said the SEC which embraces a disclosure based regime strives to inculcate a culture of corporate governance by ensuring that the market is fair, transparent and safe.

“Hence, SEC’s overarching mandate is intended to promote full and timely disclosure of material information. A strong disclosure regime can help to attract capital and maintain confidence in the capital markets. By contrast, weak disclosure and non-transparent practices can contribute to unethical behaviour and to a loss of market integrity at great cost, not just to the company and its shareholders but also to the economy as a whole,” he outlined.

Going forward, the SEC Chairman also said it will be imperative that the regulators explore the possibility of encouraging listed companies to adopt environmental social and governance (ESG) reporting on a voluntary basis.

“We have no doubt that the guidelines developed by the CA Sri Lanka based on the International Integrated Reporting Council will be useful to companies that are already producing Integrated Reports. We also anticipate that this initiative will encourage other companies to follow suit and we wish CA Sri Lanka success in implementing these valuable guidelines,” he pointed out.