Sri Lanka central bank plugs IFRS disclosure hole

Mar 04, 2014 (LBO) – A directive by Sri Lanka’s central bank has plugged a hole in newly introduced International Financial Reporting Standards (IFRS) which made accounts of banks opaque and confused the general public and even analysts. Under IFRS, banks which were earlier disclosing total non-performing loans and deposit with break downs to the public and shareholders stopped revealing the information.

The halting of disclosures on deposit break downs even made it difficult for financial professionals to analyze banks, let alone the general public, critics said.

But in the December 2014 quarter reporting period banks made additional disclosures following a central bank directive in October 2013.

Detailed breakdowns are now given on types of loans as well as other investments such as government securities on separate notes. Total outstanding bad loans are also disclosed, instead of just the loss provision.

IFRS also introduced new terminology involving longer and leas easily understood words, making published accounts more obscure instead of using familiar words which are widely understood especially by the general public, critics say.

Deposits, for example are now referred to as ‘liabilities – due to other cus