ICARE 2015

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    Impact of credit risk management on the performance of commercial banks in Sri Lanka
    (Department of Accountancy, University of Kelaniya, 2015) Kodithuwakku, S.
    The adoption of credit risk management is becoming a crucial factor for every commercial bank around the world. The objective of this study is to identify the impact of credit risk management on the performance of the commercial banks in Sri Lanka. This study is primarily based on both primary and secondary data. Primary data were collected from eight (08) commercial banks from 24 commercial banks in Sri Lanka. The sample was selected from the population based on the superior financial performance for the period under review and the availability of the consistent data over the set period. The primary data was collected mainly through an interview. The relevant authorities were interviewed personally in order to have their views on the problems and solutions. The secondary data were obtained from various sources such as Annual Reports of the selected commercial banks, relevant articles, books and magazines etc. The panel data of a five year period from 2009 to 2013 from the selected banks were used to examine the relationship between credit risk and performances. The Return on Assets (ROA) is used as performance indicator and Loan provision to Total (LP/TL), Loan Provision to Non-Performing Loans (LP/NPL), Loan Provision to Total Assets (LP/TA) and Non-Performing Loans/ Total Loans (NPL/TL) were used as indicators of credit risk. Further, a regression model was used to establish the relationship between amounts of loan as well as nonperforming loans and profitability during the period of study by using E-views software. The result shows that non-performing loans and provisions have an adverse impact on the profitability. Therefore, the study recommended the banks to implement an effective tools and techniques to reduce the credit risk management.
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    Coordination and cooperation between state universities and the industries in Sri Lanka
    (Department of Accountancy, University of Kelaniya, 2015) Kanagasingam, V.
    The purpose of this paper is to explore reason for low coordination and cooperation between Management Faculties and other stakeholders in State Universities in Sri Lanka. Theory of communicative action, which theorizes how people communicate, coordinate and cooperate is employed to theories these issues. The finding of the paper shows system, mainly bureaucratic system is being practiced in state universities in Sri Lanka result in lack of coordination and cooperation with other stakeholders, particularly industries. Therefore it is concluded that management faculty failed to coordinate and cooperate with industrialists. This study further indicates the reasons for lack of coordination and cooperation is due to lack of forum to dialogue between academics and industrialist, no trust between them, less commitment to achieve common goals and no recognition of mutual expectation between academics and industrialists. While being the first to theorize the low industrial relation in Sri Lankan state universities, this paper contributes to the research by illustrating how the theory of communicative action can be used to explore issues related to higher education globally.
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    Association of accounting information on stock prices of licensed commercial banks in Sri Lanka
    (Department of Accountancy, University of Kelaniya, 2015) Perera, R.M.S.M.; Gunaratne, Y.M.C.
    The value relevance of accounting information has become one of the most researched area among accounting researchers. However the value relevance literature provides contradictory conclusions on the association between accounting information and stock prices in different stock exchanges including both developed and developing market settings whilst there is a very limited knowledge in this regard in Sri Lankan Context. Hence this paper focused on examining the association between accounting information and stock prices of licensed commercial banks in Sri Lanka to bridge the knowledge gap in Sri Lankan context. The study conducted based on the hypothesis that there is significant association between accounting information and stock prices in licensed commercial banks in Sri Lanka. Core Capital Adequacy Ratio, Total Capital Adequacy Ratio, Net Non Performing Advances Ratio, Interest Margin, Return on Assets, Return on equity and Statutory liquid Assets Ratio were used as proxy for accounting information. The sample period of the study spans for 5 years from 2007 to 2011. The relevant data was collected from the CSE data library and the published annual reports of all the licensed Commercial Banks whose data is available for the sample period. Both descriptive statistics and inferential statistics were used to analyze data. The statistical analysis revealed that 36% of variations of share prices of Licensed Commercial Banks in Sri Lanka could be explained through the independent variables under study. Further this study revealed that there is a significant relationship between share price and Interest Margin, Return on Equity and Return on Asset. Accordingly this study concluded that there is an association between the accounting information and the share prices of the licensed commercial banks in Sri Lanka hence the accounting information is value relevance in determining share prices of such companies.
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    The ICT competencies of new accounting students of different admission criteria: the case of Sri Lankan private university
    (Department of Accountancy, University of Kelaniya, 2015) Amarathunga, P.A.B.H.; Pathiratne, S.
    The current trend in business and accounting settings requires an accountant who is an ICT literate. International Federation of Accountants (IFAC) published the International Inculcation Guidelines that include ICT erudition and competency requisites for professional accountants. These guidelines are intended to avail its member bodies in preparing professional accountants to work within the ICT environment. Amid others, the strategies highlight the ICT erudition and competency requisites for the accountants vis-a-vis the ICT users. This study aims to investigate the level of information and communication technology (ICT) competency possesses by new accounting students at the Private University in Sri Lanka according to their Admission Criteria. The study examines five software applications deemed critical for an accountant, namely, word processing; spreadsheet; database; PowerPoint presentation; and Internet and email. A survey was conducted on 182 first year accounting students. Overall, students from the Foundation Diploma Admission Criteria are found to possess the ICT competency better than those from other Admission Criteria. The competency of students from London AL and GCE A/L Admission Criteria in spreadsheet is found to be below average. All students regardless of their Admission Criteria were found to be less competent in Database Management System (DBMS).
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    Students’ perception of internship programme in accounting
    (Department of Accountancy, University of Kelaniya, 2015) Madurapperuma, M.W.; Thilakarathne, P.M.C.; Perera, H.A.P.I.
    Internship is an important part of a study program for accounting undergraduates in all universities in Sri Lanka. This research explores the students’ perception of their experience in Internship training before and after engaging the training. A questionnaire was given to 107 fourth-year accounting undergraduates in the University of Kelaniya, who had introduced internship training for its undergraduates. The data was analyzed using descriptive statistics. The results show that the accounting students had moderate levels of perception on all the categories, except future career, which showed a low level of perception. This meant that they believed that internship training had not given them the confidence that they will be able to obtain the future career they want in accounting profession. Another interesting finding of the research, through a correlation analysis shows that the longer the duration of internship training, the higher the readiness and future career development among the accounting undergraduates.
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    Does mandatory adoption of international financial reporting standards (IFRS/SLFRS) deter the earnings management of Sri Lankan firms?
    (Department of Accountancy, University of Kelaniya, 2015) Udayakumara, K.G.A.; Weerathunga, P.R.
    The aim of this study is to examine the earnings management behavior of Sri Lankan firms following mandatory adoption of International Financial Reporting Standards (IFRS/SLFRS). Especially, this study investigates whether the mandatory adoption of IFRS/SLFRS in the Sri Lanka (SL) has resulted in less earnings management for SL firms. Prior to the adoption of IFRS/ SLFRS for financial years beginning 1 January 2012, SL firms reported under Sri Lankan Accounting Standards (SLAS). Thus, this study predicted that the earnings management has decreased significantly after mandatory adoption of IFRS/SLFRS in 2012. The sample this study consists of 157 firms listed on the Colombo Stock Exchange and data were collected from financial years 2009/2010 to 2013/2014. This study uses five individual measures of earnings management relating to earnings smoothing, managing towards earnings targets. Firms are said to have reduced their earnings management if they display lower levels of earnings smoothing, less management towards earnings targets. Contrary to the prediction, the results of this study reveal that SL firms exhibit higher level of earnings smoothing after mandatory adoption of IFRS/SLFRS and thereby indicative of higher level of earnings management. However, consistent with the prediction SL firms display lower level earnings management in term of less managing towards earning targets. The level of earning management is one aspect of reporting quality of a firm. Therefore, lower level of earnings management is in turn reflects better reporting quality. Thus, these findings suggest that there is room for further improvement in order to ensure that firms consistently apply the requirement of IFRS/ SLFRS and make improvements in all aspects of reporting quality.
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    Assessment in internship – experiences of accountancy degree programme – university of Kelaniya
    (Department of Accountancy, University of Kelaniya, 2015) Aruppala, W.D.N.; Jayamaha, A.
    Internship has become an important component in accounting degree pragrammes in universities over the past decades. Academics and researchers believe that internship provides smooth transition of undergraduates from oncampus environment to the working environment (Muhamad et al 2009). Further, practitioners in accounting profession have identified that internship experience benefits not only to improve the quality of the degree programme and the skills of the students but also benefits to the employing entity during and after the internship (Beard 2006). Hence, interaction and evaluations among students, faculty and practitioners during and after the internship is invaluable in measuring outcome of the internship programme. Department of Accountancy (DoA), University of Kelaniya, Sri Lanka has introduced internship to the accounting degree curriculum in 1998. DoA believes that the objective of introducing the internship component to Accounting programme is to facilitate students to gain practical exposure from the dynamic business environment, and to enhance teamwork sprit and the employability. To achieve these objectives multiple assessment activities have been introduced in par with the International Accounting Bench Marks designed by Universities and professional institutions, and those activities have been increasingly changed to strengthening the programme. The objective of this paper presents the multiple assessment activities created by DoA in internship pragramme since 1998 to maintain the quality of the accounting degree programme. The assessment activities presented in this article are useful for other accounting pragrammes for improving quality and for accreditation of their degree programmes.
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    The impact of embedding information and communication technology content in accounting courses and its effect on overall students’ performance
    (Department of Accountancy, University of Kelaniya, 2015) Thilakerathne, P.M.C.; Madurapperuma, M.W.
    This study examines the impact of embedding Computer Aided Learning (CAD) in accounting courses in one of the conventional university’s accounting courses and its effect on overall students’ performance. It differs from the previous research in that accounting undergraduates taught MYOB accounting software in their second year of four year honours degree. At the same time other ICT courses in the accounting curriculum geared towards training students to prepare financial statements using spreadsheets etc. Student performance does not alone describe the ICT content in accounting curriculum and in effect included prior accounting knowledge, English knowledge and gender as other explanatory variables. Multiple regression analysis on student performance shows that prior accounting knowledge and its performance, internship performance, English knowledge at the entry level to the accounting degree programme together with MYOB course performance of students and internship marks significantly explained the overall performance of accounting graduates.
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    Difficulties students experienced in learning transfer pricing
    (Department of Accountancy, University of Kelaniya, 2015) Abeysekra, I.; Jebeile, S.
    With the aim of understanding student difficulties in learning and applying higher learning material, we explored the transfer pricing topic taught as a case presentation in an undergraduate accounting program at an Australian university. This study invited 25 students to take part in the study after they had learned the topic and given one week to understand it. We provided a transfer pricing problem that they have earlier faced, by adapting a problem presented in their essential reading. We compared student answers with a model answer prepared before they took on the problem. It also interviewed students to gain further insights into their learning difficulties. The study found that students experienced learning difficulties at various stages in trying the problem.
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    An empirical investigation of the computerized accounting information systems frauds in licensed banks in Sri Lanka
    (Department of Accountancy, University of Kelaniya, 2015) Gunawardana, K.D.
    The objective of this paper is to investigate the trends in frauds of computerised accounting information systems in Sri Lankan licensed banks. Sri Lankan licensed banking sector which is the most feasible service industry contributing enormously to the growth of the country. Security controls of Computerise accounting information system in the corporate sector is taken into consideration as this is currently a growing trend around the world. The core objective is to identify the frauds in the computerised accounting information systems in licensed banks in Sri Lanka. Critical reviews of past literature indicate a clear cut connection between fraud deductions in CAIS through security control systems. In order to find out the applicability of this relationship Sri Lanka, research will be undertaken in licence banks in Colombo region. The report consists secondary data which facilitate to achieve the aforementioned objectives. Secondary data analysis the existing computerized frauds in licensed banks as well as existing security control systems in licensed bank in Sri Lanka. However in secondary data analysis it clearly illustrate the computerized accounting frauds have been increased drastically. So licensed banks should have to implement the more security control systems to overcome those problems.