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*9 NATIONAL AUDIT OFFICE
NAOSL
1.2 Basis for Opinion
I conducted my audit in accordance with Sri Lanka Auditing Standards (SLAuSs). My
responsibilities, under those standards are fiuther described in the Auditor's Responsibilities
for the Audit of the Financial Statements section of my report. I believe that the audit
evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.
1.3 Responsibilities of Management and Those Charged with Governance for the Financial
Statements
Management is responsible for the preparation of financial statements that give a true
and fair view in accordance with Sri Lanka Public Sector Accounting Standards, and
for such internal control as management determine is necessary to enable the preparation
of financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, management is responsible for assessing the
Commission's ability to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless
management either intends to liquidate the Commission or to cease operations, or has no
realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Commission's financial
reporting process.
As per Section 16(1) of the National Audit Act No. 19 of 2018, the Commission is required
to maintain proper books and records of all its income, expenditure, assets and liabilities, to
enable annual and periodic financial statements to be prepared of the Commission.
1.4 Auditor's Responsibilities for the Audit of the Financial Statements
My objective is to obtain reasonable assurance about whether the financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor's report that includes my opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with Sri Lanka Auditing
2
NATIONAL AUDIT OFFICE
NAOSL
Standards will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the
basis of these financial statements.
As part of an audit in accordance with Sri Lanka Auditing Standards, I exercise professional
judgment and maintain professional skepticism throughout the audit. I also:
* Identify and assess the risks of material misstatement of the financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those
risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for
my opinion. The risk of not detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.
* Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Commission's internal control.
* Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the management.
* Conclude on the appropriateness of the management's use of the going concern basis of
accounting and based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on. the
Commission's ability to continue as a going concern. If I conclude that a material
uncertainty exists, I am required to draw attention in my auditor's report to the related
disclosures in the financial statements or, if such disclosures are inadequate, to modify
my opinion. My conclusions are based on the audit evidence obtained up to the date of
my auditor's report. However, future events or conditions may cause the Commission to
cease to continue as a going concern.
3
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NATIONAL AUDIT OFFICE
NAOSL
. Evaluate the overall presentation, structure and content of the financial statements,
including the disclosures, and whether the financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
I communicate with those charged with governance regarding, among other matters,
significant audit findings, including any significant deficiencies in internal control that I
identify during my audit.
2. Report on Other Legal and Regulatory Requirements
National Audit Act, No. 19 of 2018 includes specific provisions for following
requirements.
* I have obtained all the information and explanation that required for the audit and as far
as appears from my examination, proper accounting records have been kept by the
Commission as per the requirement of Section 12 (a) of the National Audit Act, No. 19 of
2018.
* The financial statements presented is consistent with the preceding year as per the
requirement of Section 6 (1) (d) (iii) of the National Audit Act No. 19 of 2018.
* The financial statements presented includes all the recommendations made by me in the
previous year as per the requirement of Section 6 (1) (d) (iv) of the National Audit Act,
No. 19 of 2018.
Based on the procedures performed and evidence obtained which were limited to matters
that are material, nothing has come to my attention;
* to state that any member of the governing body of the Commission has any direct or
indirect interest in any contract entered into by the Commission which are out of the
normal course of business as per the requirement of Section 12 (d) of the National Audit
Act, No. 19 of 2018.
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NATIONAL AUDIT OFFICE
NAOSI,
* to state that the Commission has not complied with any applicable written law, general
and special directions issued by the governing body of the Commission as per the
requirement of Section 12 (f) of the National Audit Act, No. 19 of 2018.
* to state that the Commission has not performed according to its powers, functions and
duties as per the requirement of Section 12 (g) of the National Audit Act, No. 19 of 2018.
* to state that the resources of the Commission had not been procured and utilized
economically, efficiently and effectively within the time frames and in compliance with
the applicable laws as per the requirement of Section 12 (h) of the National Audit Act,
No. 19 of 2018.
W. P. C. Wickramaratne
Auditor General
5
NATIONAL AUDIT OFFICE
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É NATIONAL AUDIT OFFICE
NAOSL
* 2018 qon 19 c56 c5( 9etr eed 6 (i) (1) (iv) Dcoz4cd eöed qggzaOc8
qzo d Mr. D N R Siriwardene, Ex-officio member by virtue of him holding office as
Registrar of Companies.
> Mr. Jagath Perera was appointed as an Ex-officio member by virtue of him holding
office as the President of the Institute of Chartered Accountants of Sri Lanka with
effect from 4th January 2018.
The following Members of the Commission were appointed during the second quarter of year 2018
as stated below.
>1 Mr. Rajeev Amarasuriya was appointed w. e. f. 24" May 2018. He also served as a Member
bf the Commission fbr a full tenure of three years w. e. f. 2nd February 2015.
> Mr. Aruna Herath was appointed w. e. f. 24th May 2015. He had also served as a Member of
the Commission for a period'of two yehrs as an Ex-officio Member by virtue of holding office
as the President of the Institute of Chartered Accountants of Sri Lanka w. e. f. 20th
December 2013 to 18th December 2015.
> Mr.' Manjula De Silva appointed with effect from w. e. f. 24th May 2018.
> Mr. Jayantha Fernando appointed with effect from w. e. f. 24th May 2018.
> Mr. Deshal De Mel appointed with effect from w. e. f. 28th June 2018.
The following Ex-officio.Members of the Commission ceased to hold office as stated below.
> Mr. S R Attygalle an Ex-officio member by virtue of him holding office as the Deputy
Treasury ceased to be a member upon his appointment as the Secretary to the Treasury on
31" Octqber 2018. He assumed duties as an U-officio member on 2nd February 2015.
> Mr. C P. 3 Siriwardana, an appointed member" c4ased to 'be a Ex-officio Member of the
Commission upon his retireient as Deputy Governor to the Central Bank on 30th October
2018. He assumed duties as an Ex-officio member w. e. f. 6"' September 2017.
Mr. Thilak Karunaratne ceased to be the Chairman upon serving full tenure of three years with effect from
26th January 2015 to 25th January 2018.
17
The following Members of the Commission ceased to hold office upon serving the full tenure of three years
as stated below.
> Mr. Ranel T. Wijesinha from 2nd February 2015 to 1st February 2018
> Ms. Marina Fernando from 2nd February 2015 to 1st February 2018
Mrs. Dilshani Wijayawardane from 2nd February 2015 to 1s February 2018
> Mr. Rajeev Amarasuriya from 2nd February 2015 to 1t February 2018
> Mr. Suresh Shah from 6' February 2015 to 5 February 2018
The following table depicts the relationships held by the Chairman and the Members of the Commission who
held office during the year 2018.
Name Name of Related Institution Relationship
Mr. Ranel T Wijesinha * Bank of Ceylon Independent Non Executive
Director and Chairman of the
Audit Committee until 31't
3uly 2018
( Mr. D. N. R. Siriwardene * Sri Lanka Accounting and Auditing Member (Ex-officio)
Standards Monitoring Board
* Insurance Regulatory Commission Member (Ex-officio)
of Sri Lanka
Mr. Rajeev Amarasuriya * Panthera Leo Consulting Group (Pvt) pirector
Ltd
o Alumni Association, University of President
Colombo
Mr. Jagath Perera * KPMG Partner
* Institute of Chartered Accountants of President
Sri Lanka
* Sri Lanka Accounting and Auditing Member of the Board of
Standards Monitoring Board Management
(SLAASMB)
Mr. Arjuna Herath * Sri Lanka Accounting and Auditing Member
Standards Monitoring Board
* S W R D Bandaranaike National Member of the Board of
Memorial Foundation Management
* Ernst and Young partner
Mr. Manjula De Silva * National Insurance Trust Fund of Sri Chairman
Lanka
* BPPL Holdings PLC hairman
* Tea Smallholder Factories PLC Chairman
Mr. Jayantha Fernando -
Mr. Deshal De Mel
18
The following table depict the relationships of the Member of the Commission who ceased to hold office
during the year under review.
Name Name of Related Institution Relationship
Mr. Thilak Karunaratne * Multiform Chemicals (Pvt) Ltd Chairman
Mr. S R Attygalle * Bank of Ceylon Director (27.04.2016 - 25.11.2018)
Ms. Marina Fernando -
Ms. Dilshani Gayathri * Union Bank PLC Independent Non- Executive
Wijayawardana Director
Mr. Suresh Shah a Ceylon Beverage Holdings PLC Director/CEO
* Lion Brewery Ceylon PLC Director/CEO
* Carson Cumberbatch PLC Director
o Bukit Darah PLC Director
o The Ceylon Chamber of Commerce Past Chairman
* The Employers' Federation of Ceylon Past Chairman
* University of Moratuwa Council Member (April 2015 -
K -April 2017)
Mr. C 3 P Siriwardana * Colombo Dockyard PLC Director until 30.10.2018
* Credit Information Bureau Chairman until 30.10.2018
a Insurance Regulatory Commission of Director until 30.1.0.2018
Sri Lanka
Other than the following transactions in the ordinary course of business at market rates no transactions were
recorded with the above-mentioned institutions during.the year.,
The following investments were channelled through Bank of Ceylon (BOC) during the year 2018.
Cess Fund
Rs.
Treasury Bond 1,329,947,649/-
Treasury Bills 134,892,100/-
1,753,391,498/-
BOC is the Fund Manager of the money trahsfr ed from the Cess Fund to the State Institutions Temporary
Surplus Trust Fund amounting to Rs.288,551,749/-.
Compensation Fund
Treasury Bond Rs. 234,239,545/-
SEC maintains the following three Current Accounts at BOC and the bank balances are depicted below.
Current Account Name and Balanc6'as at 1st January 2018 Baliance as at 31.12.2018
No. Rs. Rs.
SEC - 0000001694 16,441,043 6,483,104
SEC - 0009919753 610,040 693,570
Cess Fund of the SEC (542,210) 6,093,603
0009834430
Compensation Fund of SEC 114,149 108,050
75433985
19
A sum of Rs.1,961,654/- was paid to the National Insurance Trust Fund towards insurance policies
consisting of motor vehicles, personal accident, fire, electronic equipment, money in transit and public
liability.
A sum of Rs.52,806/- was provided as accrued expenses payable to the Insurance Regulatory Commission
of Sri Lanka for Auditorium hire charges.
II 2 .
1 20