In the Ernst & Young Global Integrity Report 2020, nine out of 10 respondents said that the pandemic has threatened ethical business conduct. The President of the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) Manil Jayesinghe commented: “The report identified three areas where business ethics have been disrupted – viz. disruptions to traditional working patterns, supply chains and staff levels.”
He noted that “organisations now have to ensure that they embed corporate integrity into their process,” while adding that “you’re not in a controlled environment when you work from home, which requires further strengthening of ethical practices to ensure that you meet the ethical values of the business.”
In terms of supply chains, he remarked: “A lot of companies originally used their own supply chains for distribution but use service providers such as Uber and PickMe today.” And he added that “the question is how to build a trusted partnership with these third parties and ensure they have the same ethical values in conducting business.”
“Sri Lanka’s economy and business community are small,” he noted, asserting that “even though a lot of corporates entrench higher ethical standards in their businesses, we also have to understand the inherent risks that are there – which to some extent dilutes those high standards.”
He pointed out that many companies – even listed companies – are closely held and asserted that “there is bound to be some degree of influence on corporate governance and ethics that comes through this particular structure.”
Jayesinghe also remarked that the “true independence of directors and lack of professionals with technical skills for audit committees” are among the challenges faced in reaching the ideal level of corporate governance.
On the other hand, he explained how the Pandora Papers revolve around tax havens, which companies and individuals use to either reduce their tax obligations or not pay taxes at all, adding that they’re used to some extent for money laundering.
“The countries that offer these tax havens will argue against it – and say that this kind of environment supports development in those countries by attracting capital, investments and so on,” he asserted. However, he stressed that “others will argue that they actually take genuine revenue sources away from governments to use for spending in their own countries.”
He noted: “These tax havens are genuinely used for what they call ‘tax planning’ but they can also be misused by people.” And Jayesinghe pointed out that “generally, governments today frown upon these tax havens even though in the past, they were used as a mechanism to manage or reduce taxes, in certain jurisdictions or countries.”
He then focussed on Budget 2022, stating that “the government will raise taxes to finance part of its expenditure.” He added: “The bad thing is whether everyone who should be paying taxes is in the net.”
Stressing that what’s unfair is that “some of these [taxes] are aimed at those who are already paying tax,” Jayesinghe asserted that this is likely to affect those “who are already in debt as opposed to the ones who are not paying their tax dues.”
And he shared his views on developing young talent in the profession, maintaining that “this is a trusted profession because we are deep-rooted in our knowledge… Millennials don’t prefer to spend the time it takes to become a qualified chartered accountant.”
Furthermore, he said there are other concerns that may discourage new talent from entering the profession – such as the issues highlighted by cases like Enron.
“Our contributions are not seen or appreciated,” he remarked, emphasising that the accounting profession is indispensable to ensure that capital markets and economies are functioning smoothly.
With the rise of business process management and outsourcing services, he stressed the importance of leveraging the talent pool available in Sri Lanka.