[singlepic id=73 w=150 h=200 float=left]The initiative taken by Transparency International Sri Lanka (TISL) to enhance corporate governance and financial stability in the wake of recent happenings in Sri Lanka received a positive response and a firm commitment at a recent discussion of professionals chaired by Financial Sector Specialist and former Managing Director of the National Development Bank, Ranjit Fernando.
The participants comprising of individuals representing corporate and auditing sectors, professional associations and chambers of commerce, highlighted the lack of transparency and accountability in the Financial Sector and regulators thereof. They opined that the financial instability in Sri Lanka can be attributed more to the mismanagement of the sector and the lack of regulatory oversight rather than the global financial crisis, which has only aggravated the situation. The prevalent informal economy, institutions craftily avoiding regulatory oversight as well as the lack of punitive action was stressed as bases for financial instability.
The experts at this panel discussion raised issues and possible strategies for collective action in the areas of Non-licensed deposit taking institutions, improving the effectiveness of external auditors, the role of media, strengthening the regulators role, and strengthening the financial sector.
As for the role of auditors, it was felt that the standards should be reviewed in respect of the skills and capacity required to audit different types of institutions. Although auditors are not expected to detect fraud, they should report non-compliance and deviation from statutory obligations.
The need for ‘enlightened’ regulators taking proactive approach in dealing with the macro position and understanding that it is their responsibility to protect the citizens of the country was also brought out. It was felt that regulators lack the capacity regarding professional and intellectual know-how and independence from political interference. Key regulatory institutions should be reviewed, the participants said.
It was pointed out that strengthening the financial sector should be based on enhancing financial literacy and transparent disclosure in respect of steps taken by the government to remedy the financial crisis. The media too had to perform a vital task and professional associations should play a more proactive role in highlighting issues to the media and training journalists on analytical depth and understanding of the financial situation.
In the long-term, there was a need to raise financial literacy of the public and to introduce the subject into school curricula.
Expressing his deep satisfaction on the progress of the discussions, TISL Executive Director, J C Weliamuna says that the consultative and participatory process of collective action will be continued aiming at arriving at a consensus where some change can actually be made. “The changing corporate climate with the global financial crisis and both local and international corporate collapses have led to an escalated need for implementation of collective initiatives for business integrity,” he stresses.
Meanwhile, TISL and the partners who met at the initial round table discussion on corporate collapses are awaiting the response from the Government on its proposal that a Banking and Finance Commission be appointed without delay to examine short-term measures needed for macro-economic and financial stability (in terms of liquidity, solvency, capital adequacy and professionalism) and to ensure public confidence in the financial market and availability of credit at optimum cost.
In a letter to President Mahinda Rajapakse, it was stressed that it is essential for the banking and finance sector to stand capable, stable and solvent and suggests that resources should be endowed to support the action strategies to be implemented by the government in partnership with the formal and informal private sector including small, medium and micro enterprises.
The letter states that TISL, along with some leading members of the private sector, professionals, academia, media and civil society, has initiated a collective process to support the initiatives of the government by examining the potential risks and gaps in the banking and finance sector. Based on the issues raised at this forum, TISL has suggested an outline for the proposed Commission’s Terms of Reference.
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very nice post!!!
Thanks