ICARE 2018

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Internal and External Determinants of Bank Profitability in Sri Lanka
(4th International Conference for Accounting Researchers and Educators, Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2018) Wijethunga, K.D.P.I.M.; Wijekoon, W.M.H.N.
The bank provides a vital role as a financial intermediary for the development of countries’ economy. Bank performance has significant impact on investment, growth as well as economic development. The purposes of this study therefore, are to: investigate the relationship between internal and external factors and bank performance; and identify which factor is most important for the banking industry in Sri Lanka. This study employed following independent variables in order to examine the impact of internal and external factors on profitability of Sri Lankan banks: Bank Size (BS); Bank age (BA); Operating Cost (OC); Capital adequacy (CA); Liquidity Risk (LR); Total Deposit (TD); The real GDP growth (RGDP); and the yearly growth of householders’ disposable income (YGHDI). Sample of this study consists with twenty licensed commercial banks and specialized banks and data were gathered from multiple sources such as annual reports, bank web sites and central bank web site over the periods from 2009 to 2017. The data were analyzed using multiple panel regression model. Results of the study indicated that the Bank Age, Total Deposit, Yearly Growth of Household Disposable Income has a positive relationship with bank profitability. Liquidity ratio, Capital Adequacy ratio and Operating Cost negatively effect to the performance of banks in Sri Lanka. In addition, Bank Size and GDP which have reported a positive insignificant relationship with ROA. Results concluded that both internal and external factors contributed on the performance of Sri Lankan Banks.
Factors Affecting to Formal Accounting System in SME’s in Sri Lanka
(4th International Conference for Accounting Researchers and Educators, Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2018) Bandara, R.M.S.S.S.; Karunarathna, W.V.A.D.
Small and Medium enterprise can’t be ignored throughout the economic and social world because of the Small and Medium (SME) sector provides more contribution to Gross Domestic Product (GDP) and significant percentage has taken by SME sector in the Sri Lankan economy and also it is very much important for solving unemployment problem of the country. It is important to study how affect formal Accounting systems effect on the survival and growth of SMEs. Therefore, this study aims to identify what are the factors affect to the formal Accounting System in SME’s in Sri Lanka. So, Financial Accounting Practices, Skills of Financial Accountant, Business Life Cycle, External Pressure and Capacity Argument are considered by the study as independent variables of the study that affect to the adoption formal accounting system for the SME’s. The study used Primary data of 60 Small and Medium Enterprises located in Kurunegala District. A well-structured questionnaire was used to collect data from the respondents of the study. Descriptive statistics and Correlation analysis were applied using SPSS software. The Results of the study revealed that there is a positive relationship between formal Accounting System and SME’s Financial Accounting Practices, Skills of Financial Accountants and External Pressure
The Impact of Board Characteristics on Sustainability Reporting: Empirical Evidence from Sri Lankan Firms
(4th International Conference for Accounting Researchers and Educators, Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2018) Dimuthumali, H.G.K.S.; Rajapakshe, R.M.D.A.P.
At the present scenario, Sustainability Reporting plays vital role in financial reporting as it is crucially impact on the growth and continuous development of a firm in certain and equity market. There are several factors influenced on sustainability reporting. Among them board characteristics impact more as disclosure decisions are one of the primary control functions of the board. The purpose of the research is to explore the role played by the board of directors in corporate sustainability reporting among the listed companies in Sri Lanka. Research problem is based on the board characteristics and it is impact on the detailed sustainability reporting. Data collected from the sample of 60 Sri Lankan listed companies over a period of four years (2014-2017), representing practically four business sectors which represent the highest number of companies under sector classification of CSE in 2017. Board size (BS), Board independency (BIND), Dual leadership (DL), Board with female directors (BFD), Board ethnicity (BE) and Impact of ownership structure (OS) were used as the board characteristics. Binary logistic regression is the method which used to analyze the research data. The results reveals that firms which follow a detailed sustainability reporting have larger boards, more female directors and higher portion of independent directors. This study also found that dual leadership, board ethnicity and board ownership have no influenced on detailed sustainability reporting. This study contributes to provide value addition into the existing literature on this subject by providing sufficient evidences to fill up the gap in the existing literature
The Impact of Macroeconomic Variables on Stock Market Performance of Sri Lanka
(4th International Conference for Accounting Researchers and Educators, Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2018) Vishmini, K.W.O.; Madurapperuma, M.W.
Smooth functioning of a stock market is paramount important to a healthy economy. Investigations of relationship between macro-economic factors and performance of stock markets at many emerging economies including Sri Lanka are relatively limited. This study aims to identify the impact of macroeconomic variables on the stock market performance of Sri Lanka. The dependent variable is the All Share Price Index of Colombo stock market (ASPI) and the explanatory variables are the Gross Domestic Product (GDP), Inflation proxy by wholesale price index (WPI), Interest rate (IR), Balance of payment (BP) and Exchange rate (ER) over the period of 2010 to 2017 in a quarterly basis. All the data were collected from the Central Bank Annual Reports and from the Colombo Stock Exchange. Data were analyzed using VECM using E-Views. The results revealed that the macroeconomic variables and the stock market index (All share price index) in Sri Lanka significantly related. Analysis further showed that stock market index significantly positively related to GDP, ER and IR while it is negatively related to the inflation proxies by wholesale price index of Sri Lanka. The other variable which is the Balance of payment is insignificant in determining the stock market performance
The Impact of Corporate Characteristics and IFRS Adoption on Audit Report Lag: Evidence from Listed Manufacturing Companies in Sri Lanka
(4th International Conference for Accounting Researchers and Educators, Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2018) Srinath, V.P.N.; Kawshalya, M.D.P.
An audit report lag (ARL) is defined as a period from a company’s fiscal year-end date to the audit report date. The shorter the ARL in releasing audited financial statements, the greater the usefulness and benefits that users can derive from these statements. The purpose of this research is to the identify impact of corporate characteristics on audit delay in Sri Lankan manufacturing companies, listed in Colombo Stock Exchange (CSE). Further, since IFRS adoption represents a significant milestone in the accounting discipline in Sri Lanka which can reasonably expect an impact on audit report lag also, the study extended to investigate the impact of IFRS adoption also on audit report lag. Accordingly the current study investigated the influence of corporate size, audit firm statues, CEO duality, ownership concentration, ownership dispersion, board size and IFRS adoption on audit report lag. The data for the study collected from annual audited financial statement of all the listed manufacturing companies of CSE. Data for the period of nine years from 2008/2009 financial year to 2016/2017 financial year has been collected. Based on the regression estimate obtain, the study concludes that the audit report delay influenced by corporate size, audit firm statues, CEO duality, ownership concentration, ownership dispersion, board size and IFRS adoption
The Impact of Internal Corporate Governance on Convergence of IFRS: Evidence from Sri Lanka
(4th International Conference for Accounting Researchers and Educators, Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2018) Harshana, R.D.U.; Perera, H.A.P.L.
The convergence of International Accounting Standards (IAS) with International Financial Reporting Standards (IFRS) is an important debate among standards setters, policy makers, regulators, professional bodies and companies worldwide. The objective of this research is to examine the impact of internal corporate governance on convergence of International Financial Reporting Standards (IFRS) and to measure the impact of individual corporate governance factors to the convergence of IFRS. Changes of equity during the year were used as the dependent variable of the model and no of financial and non-financial variables were used as independent variables. Financial and non-financial data were collected from annual reports published by the listed manufacturing companies in Colombo Stock Exchange (CSE) during the period of 2009 to 2015. This six (6) year period was divided into two categories as before and after convergence of IFRS. All the manufacturing sector companies were selected as the sample of the research. Due to the unavailability of data, there were 29 companies used for the final analysis. Panel data regression was used to analyze data using E-views software. The results of the study revealed that, effective internal corporate governance mechanism helps companies more aligned with convergence of local accounting standards to IFRS and thereby provide high quality financial information to users of the information
Stock Market Development and Economic Growth in Sri Lanka
(4th International Conference for Accounting Researchers and Educators, Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2018) Perera, K.A.H.; Madurapperuma, M.W.
Stock market plays an important role on economic development and it promotes the economic growth and prospects of the economy. The main objective of this research was to identify the impact of Stock Market Development on the Economic Growth in Sri Lanka. Using data for the period from 2000 to 2017, this study employed ECM for long run relationship and for the short run dynamics. Market capitalization, Stock total traded value and turnover ratio and inflation were taken as independent variables; stock market development was taken as the dependent variable. The annual time series data were employed for the Sri Lanka economy for the period of 2000 – 2017. These data were collected from website of Colombo stock Exchange annual reports of Central Bank of Sri Lanka, Department of Census and Statistics of Sri Lanka web site. Multiple regression model and correlation analysis were used to analyze the data using E-views software. The findings of this study suggest a positive relationship between efficient stock market and economic growth both in short run and long run. The results are consistent with the theoretical predictions
The Impact of Intellectual Capital on Firm’s Market Value and Financial Performance
(4th International Conference for Accounting Researchers and Educators, Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2018) Ganegoda, G.P.S.K.; Karunarathna, W.V.A.D.
Intellectual capital has a huge impact on the firms’ value creation process and it will also generate competitive advantage to the organization with the development of knowledge based economy. The study aims to identify the impact of intellectual capital on firm’s market value and financial performance of the bank, finance and insurance sector and manufacturing sector in Sri Lanka. Return on asset and market to book value are separately used as dependent variables. The Value Added Intellectual Coefficient (VAIC) method introduced by Pulic (2000) is used to measure the intellectual capital of the firm. The study used secondary data of 15 bank, finance and insurance sector companies and 15 manufacturing sector companies covering the period of 2012 to 2017. Data were analyzed using linear regression model and used E-Views software to perform statistical tests. The results revealed that intellectual capital significantly impact to the firm’s financial performance in bank, finance and insurance sector. However, according to the results there was no significant impact of intellectual capital on firm’s financial performance in manufacturing sector. Furthermore, intellectual capital has no significant impact on firm’s market value in both sectors
The Impact of Exchange Rate Movements on the Stock Returns of Commercial Banks in Sri Lanka
(4th International Conference for Accounting Researchers and Educators, Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2018) Bandara, A.W.M.S.S.C.; Thilakerathne, P.M.C.
Foreign exchange rate is price of the local currency stated in terms of another currency. It is widely held that foreign exchange rate is important financial and economic factor which affects the value of common stocks. Exchange rate movements are highly affected for creating risk in banking institutions. This paper investigates the impact of exchange rate on the stock returns of commercial banks listed in Colombo Stock Exchange (CSE). Data were extracted from the Central Bank of Sri Lanka (CBSL) and CSE. Data were analyzed by using linear regression analysis for the period of July 2013 to June 2018 using monthly observations. The results of the study indicates that there is significant exposure of Sri Lankan listed commercial banks to major exchange rate movements suggesting that an appreciation (depreciation) of domestic currency value (Sri Lankan Rupee) against four major currencies such as US Dollars, Japanese Yen, Euro and Great Britain Pounds delineates positive as well as impact on stock returns of the respective banking institutions. The important characteristic in this study is that estimation of the exposure coefficients are based on the individual firm level data
Credit Risk Management and Financial Performance in Listed Financial Institutions in Sri Lanka
(4th International Conference for Accounting Researchers and Educators, Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2018) Kumudumali, H.H.E.; Wijesinghe, K.D.G.N.
Financial Institutions are exposed to different types of risks, which effect the performance and activity of these financial institutions. Credit risk is one of the most significant risks that financial institutions face, considering that granting credit is one of the main sources of income in financial institutions. The main purpose of this study is to investigate the impact of credit risk management on financial performance in finance institutions. The study considered ROA (Return on Asset) as profitability indicator while Non- Performing Loan Ratio (NPLR), Total Loans to the Asset ratio, Capital Adequacy Ratio (CAR) are considered as credit risk management indicators. The study used secondary data of 30 financial institutions covering the period of 2012 to 2017. Data were analyzed using panel data analysis through E-Views packages. The result reveals that overall credit risk has significant impact on profitability of listed financial institutions
The Impact of IFRS Adoption on Financial Ratios
(4th International Conference for Accounting Researchers and Educators, Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2018) Rajapaksha, R.A.S.; Kawshalya, M.D.P.
Since the world economy is getting globalized, past practices of accounting may not be able to satisfy the information requirements of global stakeholders. Therefore the concept of harmonizing the accounting practices has been put forward and realized by the implementation of International Financial Reporting Standards (IFRS) issued by International Accounting Standard Board (IASB).The main purpose of this research is to examine the impact of IFRS adoption on financial ratios in Sri Lankan listed manufacturing sector companies. The data was collected for the period of eight years from 2008/2009 to 2015/2016 using annual reports published on listed manufacturing sector companies. The total sample period is divided to two parts as pre IFRS and post IFRS for comparison. The ratios which are selected for the analysis are current ratio, earning per share, debt to equity ratio & return on equity ratio. The findings of the study suggests that there is no significant difference between the ratios calculated as per previous accounting standards and after adopting IFRS except return on equity ratio. Through the impact was not found to be significant for debt equity ratio and current ratio. These findings would be useful since data used for the current study is more recent than most IAS or IFRS studies around the world and are stratified to allow for comparison between voluntary/early adopters and mandatory/late adopters
Information Technology and its Implication on Internal Auditing in Sri Lankan Companies
(4th International Conference for Accounting Researchers and Educators, Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2018) Udayangani, M.A.S.; Perera, H.A.P.L.
Information Technology (IT) is a very much important function in designing, implementing and directing many controls over the organizations’ business processes. Currently both internal & external auditing processes are rapidly changing and one of the main reasons is the changes in IT. This study aims to find the impact of IT and its implications on Internal Auditing. Further, the study examines the influence from Objectives and the Organizational Characteristics on the IT Evaluations performed in Sri Lankan companies. IT Evaluations, Objectives and Organization Characteristics were used as independent variables and IT Evaluation categories were used as the dependent variable. This study carried out using a standard questionnaire which consists of mainly four parts. 100 questionnaires were distributed to companies representing manufacturing, service, banks and hotel sector using the cluster sampling method. Data received from 80 respondents representing all sectors. Data were analyzed using the Statistical Package for Social Science (SPSS). According to the results of the study, internal auditors mainly focus on traditional risk such as IT data integrity, asset safeguarding, privacy and security and less attention has given to system development and acquisition
The Impact of Dividend Policy on Shareholders’ Wealth and Business Performance of Listed Manufacturing Companies in Sri Lanka
(4th International Conference for Accounting Researchers and Educators, Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2018) Dilshani, L.D.C.; Abeywardhana, D.K.Y.
The dividend policy plays a major role in current business as most important financial policy not only from the viewpoint of the company, but also from that of the shareholders, the consumers, employees, regulatory bodies and the Government. The study aims to identify how the dividend policy influences to the shareholders ‘wealth and the business performance of listed manufacturing companies in Sri Lanka. Dividend per share (DPS) and Dividend payout (DPO) were used as Dividend policy indicators while Return on Equity (ROE) used as business performance indicator and earning per share (EPS) and Market share price (MSP) used as shareholders’ wealth indicator. The study used secondary data of 41 manufacturing companies covering the period of 2012 to 2017. Data were analyzed using regression analysis and EViews package.The result reveals that dividend policy has positively significance impact on shareholders’ wealth and the business performance of listed manufacturing companies in Sri Lanka
The Study on Determinants of Non-Performing Loans in Listed Commercial Banks in Sri Lanka
(4th International Conference for Accounting Researchers and Educators, Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2018) Adikari, A.M.U.S.,; Rathwatha, G.M.H.P.K.
Non-performing loans (NPLs) are considered as a critical factor for any bank and has the possibility of resulting huge losses if the required attention was not given. Though many researches have been conducted on factors affecting to NPL, this is still an open area for further studies. This study investigates determinant factors of Nonperforming loans (NPLs) in Sri Lankan banking sector. The survey has been conducted with a sample of 10 license commercial banks in Sri Lanka over the period of 2008 to 2017. This study focuses on the impact of bank specific factors on NPLs. Non-performing loan rates are measured through the gross NPL ratio published by banks and bank specific factors considered are Operating Expense to Income (OEI), Net Income to Total Assets (NITA), Loans to Total Assets (LTA), Loan Growth (LG), and Natural Logarithm of Size of Bank (NL). GDP growth rate (GDP) and Lending Rate (LR) have been considered as controlling variables in this study. The panel regression model has been applied to determine different bank specific factors that affect to NPL. During the study it was revealed that there is a positive correlation between loan to asset ratio and NPL rate while loan growth rate, size of the bank, operating expense to income, net income to total assets show a negative correlation with NPL rate
The Impact of Dividend Policy on Shareholders’ Wealth and Business Performance of Listed Manufacturing Companies in Sri Lanka
(4th International Conference for Accounting Researchers and Educators, Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2018) Dilshani, L.D.C.; Abeywardhana, D.K.Y.
The Dividend policy play a major role in current business as most important financial policy not only from the viewpoint of the company, but also from that of the shareholders, the consumers, employees, regulatory bodies and the government. The study aims to identify how the dividend policy influences the shareholders ‘wealth and the business performance of listed manufacturing companies in Sri Lanka. Dividend per share (DPS) and Dividend yield (DY) use as Dividend policy indicators while Return on Equity (ROE) use as business performance indicator and earning per share (EPS) and Market share price (MSP) use as shareholders’ wealth indicator. The study use secondary data of 30 manufacturing companies covering the period of 2012 to 2017. Data analyze using regression analysis. The result reveals that dividend policy has significant positive impact on shareholders’ wealth and the business performance of listed manufacturing companies in Sri Lanka. The previous empirical studies provide evidences that dividend policy has significant positive impact on shareholders’ wealth and the business performance
Quality of Loan Portfolio Management and Its Impact to the Financial Performance of Commercial Banks in Sri Lanka
(4th International Conference for Accounting Researchers and Educators, Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2018) Hewaarachchi, H.A.H.M.; Perera, H.A.P.L.
In today’s world, banking sector has become extremely competitive powerful industry, providing many services to the society. Careful management of banks’ loan portfolio is very much essential for their stability as significant amount of banks’ revenue is collected from loans and advances given. This study aims to find out the relationship between quality of loan portfolio management and the financial performance of Commercial Banks in Sri Lanka and the impact of it. Return on Assets (ROA) was used as the dependent variable to measure the financial performance of Sri Lanka, while Loan Portfolio Profitability (LPP) and Loan Loss Provision to Gross Loan Advances (LLP/GLA) were used as independent variables to measure the quality of loan portfolio management. Cost Income Ratio (CIR), Liquid Funds to Total Assets (LF/TA) and Total Assets (TA) were used as control variables. Due to the unavailability of data, only 15 Commercial Banks in Sri Lanka were considered for the period of 2008 to 2017. The panel data regression was used to test the hypothesis formulated, and data were analysed using the E-Views software. The results reveal that, the overall quality of loan portfolio management has a significant impact on the performance of Commercial Banks in Sri Lanka
An Empirical Analysis of Exchange Rate Volatility on Foreign Direct Investments in Sri Lanka
(4th International Conference for Accounting Researchers and Educators, Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2018) Ariyasinghe, A.T.T.; Madurapperuma, M.W.
Foreign direct investment is considered as one of key factor in determining factors for its economic growth. However, the macroeconomic environment in the host country must be favorable to attract foreign investment. Exchange rates of its currency against other foreign currencies are one of the main factors that affect the foreign direct investment of a country. The main objective of this study is to investigate the relationship between exchange rate volatility on foreign direct investments in Sri Lanka during the period of 2000 to 2017. Real exchange rate, Real exchange rate volatility, Openness of the economy, GDP per capita, stock of foreign direct investment and political situation were selected as independent variables while foreign direct investment was selected as a dependent variable. Data were collected through annual reports of Central Bank of Sri Lanka and World Bank. Data was analyzed using Vector Error Correction model. The results indicate a negative longrun relationship between exchange rate volatility and foreign direct investment for Sri Lanka. The existence of a short-run association was not Significant in Sri Lanka
Impact of Internet-Based Communications on Employee’s Satisfaction in Finance Sector
(4th International Conference for Accounting Researchers and Educators, Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2018) Dabarera, G.A.T.; Thilakarathne, C.R.
The prime target of this research article is to investigate the impact of internet-based communications on employee’s satisfaction in the finance sector in Sri Lankan context. With the rise of the internet-related communication system, electronic mailing method was widely spread among corporate entities. While email has been seen as a method for expanding authoritative coordination and responsiveness, the utilization of electronic correspondence has a dim side to it. This survey examined cyber incivility in the workstation of Sri Lanka and also examined its impact on employee job satisfaction, organizational commitment, quit intention. Data were collected from 65 employees. Results of the study displayed that male boss/supervisors engaged in active forms of cyber-incivility while female boss/supervisors engaged in passive cyber incivility. Regression analyses also displayed that cyber-incivility was negatively related to organizational commitment and employees’ job satisfaction. Employees who suffered cyber incivility were also more likely to quit their jobs. Thus, cyber incivility has negative consequences on both organizations and individuals
Environmental Accounting Practices and Firm Financial Performance: An Empirical Analysis of Selected Listed Manufacturing and Construction Companies in Colombo Stock Exchange of Sri Lanka
(4th International Conference for Accounting Researchers and Educators, Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2018) Lakmal, A.A.H .; Rajapakse, R.M.D.A.P.
This research focused on the Environmental Accounting practices (disclosures) and the firm financial performance of the selected listed Construction and Manufacturing companies in Sri Lanka. The main objective of this research is to investigate the present state of environmental reporting practice of Sri Lankan listed companies and to show the relationship between EA disclosure level and financial performance of the selected companies. Environmental Accounting disclosures and financial performance are being the main variable. GRI Guidelines were used as independent variable and also financial performance as dependent variable. Material, Energy, Water, Biodiversity and Emissions are used as environmental accounting disclosure aspects. All the companies listed in Colombo Stock Exchange under Manufacturing and Construction sectors were considered in this research. As well as the methodology follows the content analysis. The target population was 04 listed construction companies and 45 listed manufacturing companies. Both qualitative and quantitative data were collected using annual reports. The findings of this research indicate that the environmental disclosure practice of listed Manufacturing and Construction companies in Sri Lanka is not at a satisfactory level. But there is a significant relationship between EA disclosure level and firm financial performance
The Impact of Entity Specific Factors on External Audit Fees of Listed Non-Financial companies in Sri Lanka
(4th International Conference for Accounting Researchers and Educators, Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2018) Arasara, M.H.P.; Kaushalya, M.D.P.
Limited liability companies in Sri Lanka are statutorily required to secure the services of an auditor in order to obtain a professional opinion on their financial statements. The usefulness of an external audit in enhancing the credibility of financial statements depends on the quality of audit services being provided. This study sets out to examine the factors that may influence external audit fees paid by the Sri Lankan nonfinancial companies listed on Colombo Stock Exchange (CSE). Specific attention is focused on the investigation of the potential influence of corporate size, profitability, corporate risk, corporate complexity, sector classification, external audit report lag, audit committee independence, status of the audit firm on audit fees. Data used in this study are mainly collected from 2013 until 2017 annual reports published by the Sri Lankan non-financial companies listed on Colombo Stock Exchange. The sample which contains 50 numbers of companies and total observation is 250. Data were analyzed using regression model with an ordinary least squares (OLS) technique over E-Views package. The findings pointed that there is a significant and positive association between audit fees and each of corporate size, company’s profitability, risk and audit committee. A significant and negative relationship has been detected between business complexity and external audit fees. The findings also revealed that audit fees are not significantly associated with, industry type, status of audit firm and audit report lag