The Institute of Certified Management Accountants of Sri Lanka (CMA Sri Lanka), has made the several proposals to Budget 2027 with the release the 19 Cost Accounting Standards (CASSL) in accordance with the mandate bestowed upon it by Act No. 23 of 2009, for use in the public and corporate sectors of Sri Lanka.
The technical support for the project was provided by the Cost Accountants and Management Accounting Institutes of South Asia and Canada. In these countries the Cost Accounting Standards have been applied in regulated industries and services bringing benefit to the economy, consumers and society.
CMA Sri Lanka said it is necessary to drive the importance of proper cost ad management accounting in both the Public and Private sector which is a prerequisite for sustainable value creation in the economy. Costing and Pricing are of prime importance and will have a major impact on the society. This will result in the consumer been benefitted by obtaining their goods and services at a fair and reasonable price without having to pay for the inefficiencies and unreasonable profit margins of the manufacturers, service providers and traders.
Cost Accounting will improve the efficiency, productivity and performance of the industrial and service sectors. In the South Asian Region, India, Pakistan and Bangladesh Cost and Management Accounting is well established and Government Rules and Regulations have been brought in for essential services and industries to maintain cost accounting records and carry out a compliance cost audit by qualified Cost and Management Accountants. This provides regulators a reliable mechanism to ensure that the costing properly reflects the price of a product and consumers are not paying for inefficiencies and wastages.
By adopting and implementing Cost Accounting Standards, will carry considerable cost savings and benefits with positive implications for the development of a sustainable economy and benefits to consumers and society.
The proposals are outlined below:
Mandate maintenance of cost records and Cost Accounting that are strictly in accordance with Cost Accounting Standards and also include in the Companies Act.
Mandate Financial and Pricing Regulators such as Public Utilities Commission of Sri Lanka (PUCSL), Consumer Affairs Authority (CAA), Excise Department, and Inland Revenue Department (IRD), Customs Department, Export Development Board (EDB), International Trade among others to accept Cost Accounting Standards, compliant cost statements when interacting with clients. Furthermore, the General Treasury shall utilise these cost statements for pricing subsidies, setting price ceilings, and ensuring transparent cost records, cost statements and compliance particularly across electricity, petroleum, transportation and price – controlled goods and services.
Establish an office of Chief Cost and Management Accountant in the General Treasury/Finance Ministry, Ministries, State Corporations, Financial institutions and to cover other public sector entities.
Cost Accounting Standards (CASSL) and records generate cost information that is reliable, transparent, and auditable. Furthermore, a uniform and consistent process enables meaningful comparisons, enhances internal decision making (including pricing) and drives entities to adopt effective cost control and cost reduction strategies. They also pave the way for cost audits which constitute the next phase of the implementation process.
Several countries in the region including India, Pakistan and Bangladesh have used cost accounting standards to achieve competitive advantage. By diligently adopting these frameworks across both public and private sectors, Sri Lanka could secure similar success especially at a time the Sri Lanka has been reclassified as an upper-middle-income economy by the World Bank on 1 July 2026. This change marks a major recovery milestone following the severe 2022 economic crisis.
Granting national recognition of these standards is a critical step towards this goal and is the driving force behind these proposals. The Government backing will enable CMA Sri Lanka to help transform the nation into a robust economy through prudent cost management.
The implementation of cost accounting records, cost accounting, cost audit and rules in the different sectors will be beneficial in several key areas:
1. Transparency and accountability – The Government will be able to improve financial transparency in all manufacturing, agriculture and plantations and service industries, ensuring accurate cost reporting, cost audit and preventing mismanagement.
2. Regulatory compliance – the cost records and cost audit rules, will mandate cost records for industries with significant financial impact, including electricity generation and distribution.
3. Efficiency and cost control – By maintaining detailed cost records, companies could identify inefficiencies, optimise resource allocation, and reduce unnecessary expenditures.
4. Consumer protection – Proper cost accounting helps regulate electricity tariffs, ensuring fair pricing for consumers while maintaining the financial health of power companies.
5. Government oversight – The Finance and Planning Ministry, Power Ministry and regulatory bodies use cost data to monitor accurate pricing, assess subsidies, policy effectiveness, and financial sustainability of the sector.
CMA Sri Lanka is of the opinion that the inclusion of the adoption and implementation of Cost Accounting Standards, Cost Records and Cost Audit in the Budget Proposals 2027, will provide a firm foundation for the implementation, monitoring of the Budget Proposals and bring about cost savings, accountability and benefits to the society and consumers.