0 0 NATIONAL AUDIT OFFICE ur v. HSM/E/SHSDP/2/18 as, f.-7 September 2019 My No. Your No Daeb 2 The Secretary, Ministry of Health, Nutrition and Indigenous Medicine Report of the Auditor General on the Financial Statements of the Second Health Sector Development Project - Component II for the year ended 31 December 2018 The English version of the above mentioned report is sent herewith along with a copy of the financial statements certified. R.M.J Rathnayake Acting Auditor General Copies to 01. Secretary, Ministry of Finance 02. Project Director, Second Health Sector Development Project Component II 03. Senior Financial Management Specialist, International Development Association, for information ota 396 7) o g u,, '*A d < -,td &eW 306/72, Gur6W6)u 0i9, uo qpcPG,om , wrlma, No. 306/72, Polduwa Road, Bataranuilia, Sri Lanka. f 94 11 2 88 70 28 - 34 J4 II 2S6723 NN udiorgenra naosl.lgv.kI k NATIONAL AUDIT OFFICE asorr 2.. HSM/E/SHSDP/2/18 Laogi 2We a 7 September 2019 M1, \j. Your No. Date The Secretary, Ministry of Health, Nutrition and Indigenous Medicine Report of the Auditor General on the Financial Statements of the Second Health Sector Development Project - Component II for the year ended 31 December 2018 The English version of the above mentioned report is sent herewith along with a copy of the financial statements certified. R.M.J Rathnayake Acting Auditor General Copies to :- 01. Secretary, Ministry of Finance Z02. Project Director, Second Health Sector Development Project Component II U 03. Senior Financial Management Specialist, International Development Association, for information q., 1t. 72. C >) , 0%0@de. @ cn / @o. 306/72, Gunilrsu 4T0. u" qpane, &60 Mff No. 306/72, Polduwa Road, Baltaramulla, Sri Lanka. ' 94 11 2 88 70 28 - 34 +94 11 2 88 72 23 ag(@auditorgeneral.gov.Ik w%ww.nosl.gov.Ik NATIONAL AUDIT OFFICE I HSM/E/SHSDP/2/18 September 2019 The Secretary, Ministry of Health, Nutrition and Indigenous Medicine Report of the Auditor General on the Financial Statements of the Second Health Sector Development Project - Component II for the year ended 31 December 2018 1. Financial Statements 1.1 Opinion The audit of the financial statements of the Second Health Sector Development Project - Component II for the year ended 31 December 2018 comprising the balance sheet as at 31 December 2018 and receipt and payment account and cash flow statement for the year then ended, and notes to the financial statements was carried out under my direction in pursuance of provisions in Article 154(1) of the Constitution of the Democratic Socialist Republic of Sri Lanka read in conjunction with provisions in the Loan Agreement No-5228 LK dated 19 August 2013 entered into between the Democratic Socialist Republic of Sri Lanka and the International Development Association. In my opinion, accompanying financial statements gives a true and fair view of the it financial position of the Project as at 31 December 2018, financial performance and its cash flows for the year then ended in accordance with Generally Accepted Accounting Principles. 1.2 Basis for Opinion I conducted my audit in accordance with Sri Lanka Auditing Standards (SLAuSs). My responsibilities, under those standards are further described in the Auditor's Responsibilities for the Audit of the Fiqancial 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 3ro'%. 72,-7 A, i 4, T)I- 30fi?'72, GulJ7I&fi~p, 4. ,yv tA . S-.t Nc. k1;h!72, 1iiiRxJ 3:kIt.irr-.W)i. Sr. I dnka -94 11M - - all, I,tIdidIvIcl xc ,'N nusl ul I k .14l 94 1 1 11- NATI(r- - T &FFICE 1.3 Other information on performance of the Project The other information as stated below does not include in the financial statements and my opinion thereon does not cover the other information. * It was observed that a sum of Rs.41 million had been spent by the Project to procure equipment and provide facilities to visit abroad on a study tour to evaluate the possibility of incorporating HPV/DNA screening tests into the National Cervical Cancer Screening Programme. Although it was agreed to complete the respective research activities before 30 September 2018, only 8,635 samples were tested even as at 31 August 2019 out of 10,000 samples planned to be tested during research period. Therefore; the research activities to determine the possibility to carry out tests by incorporating Cobas 4800 HPV/DNA tests, as a primary method for screening of cervical cancer in Sri Lanka had not been completed. 1.4 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 Generally Accepted Accounting Principles 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. Those charged with governance are responsible for overseeing the Project's financial reporting process. 1.5 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 auditoi`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 2 g,'14)-,AJ. AUDIT OFFICE: Sri Lanka AU.iting Standards will always detect a material rnsstameL whn i exists. Misstatements can aise from fraud or error and are considered materi th individually or in the aggregate1 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: sstatement of the financial a Identify and assess the risks of material Mi 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 e resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controL Obtain a:n understanding of internal control relevant to the au dit in order to design a- lit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Project's internal control. . Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the management. 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. 3 , NATIONAL AUDIT OFFICE % OSL 2. Report on other requirements of the Donor AgencT As required by the International Development Association, I state the followings: (a) The basis of opinion of the audit is as stated above. (b) In my opinion: - the funds provided had been utilized for the purposes for which they were provided, the opening and closing balances, withdrawals from and replenishments to the Special (Dollar) Account had been truly and fairly disclosed in the book and records maintained by the Project and the balance as at 31 December 2018 had been satisfactorily reconciled with the accounting records of the Central Bank of Sri Lanka as at that date, the Statements of Expenditure submitted could be fairly relied upon to sapport the applications for reimbursement in accordance with the requirements specified in the Financing Agreement, kne satisfactory measures had been taken by the management to rectify the issues highlighted in my previous year audit report, and . the financial covenants laid down in the Financing Agreement had been complied with. R.M.J thnayaka Acting Auditor General 4 치 l 낄! ■, . . . . 7 PT -ddp SECOND HEALTH-SECTOR DEVELOPMENT PROJECT COMPONENT 11 (IDA/WORLD BANK FUNDED) 191A 1/1, Ana garika Dharmapala Mawatha, Colombo 07 BALANCE SHEET AS AT 31 ST DECEMBER 2018 END OF 2017 END OF 2018 SL RS. US$ SL RS. US$ 71,585,075.90 467,876.31 Goods(Fixed Assets) 176720,334.20 1,071,032-33 31,718,374.32 207,309.64 Local Tranining 1.18,929,495.87 7201784.82 241,850,104-25 1,580,719.64 Foreign Tranining J.72,085,620-37 1,137,183.25 36,047,517.36 235,604.69 Innovation Grant for Research 72,b47,792'.3 7 436,653.29 58,262,659.60 380,801.70 DHS Survey 649,2SO.00 4,243.46 Next World Bank Preparation 602,788.62 3,9a9.79 Review Meetings 4; 700.80,., 8,949.70 20,-046,3b9.75 131,021.6,3:, Incirementalbperating Cost 16,878,421.17. 402,Z93 46 7 '4L 460,762,079.80 3,011,516.86' .561,43%364.7-8 .31496,896.85 Current Assets 142,078,096.38 928,615.01 Balances in the Special Doller A/C 133,194,146.90 728,832-94 23,890,075.54 156,144.28 Balance in the Cash Book ( Note J 12,859,397.14 70,727.68 10,407,692.19 68,024.13 Advances Note: 2 Current Liabilities 637,137,943.91 4,164,300.29 TOTAL ASSETS 7074491,908,82 4,296,457.47 Net Assets Finaned By 534,572,360.00 3,493,936.99 IDA Loan 680,780,394.11 4,137,460.36 102,565,583.91 670,363.29 Exchange Gain 26,711,514.71 158,997.11 6374137,943.91 4,164,300.29 707,491,908.82 4,296,457.47 We have prepared the above balance sheet as at 31.12. 2018, and the Recipts and payment Account, Cash low Statement an d Recon cilation oi Special Doller Accou nt for year en ded in respect of I DA fu nd ed Secon d. Hea Ith Sector D6velo pryie nt Proj ect Component 11 based on the books and records maintainecl.by the project office. We certify that to the best of our knowIec(j&apd belief, the Balhce Sheet, Recipts and payment Account, Cash Flow Statement for the year ended have beep pre6red in A accordance with General acepted Accunting princeples. 1,a] =aas.,!-a Dr.S.C.Wickrannaslnghe W.M. Wijesooriy .. . .......... ... ........... ................................. ................ ......... M 14f-k-secretary Project D1 Project Accountant r Ministry of Health Nutrition & Indigenous Medicine 51-15DPS-S - SH5DP Project, C e c rn SHSDP Minis. viv. Second Health Sector Development Project Component 11 IDA/WORLD BANK FUND 19A 1/1, Anagarika Dharmapala Mawatha, Colombo 07 RECEIPTS AND PAYMENT ACCOUNT FOR THE YEAR ENDED 31st DECEMBER 2018 SL RS. USD $ Cash Book Balance as at Ist.1.2018 34,297,767.73 224,168.41 Receipt Receipt from Specia Dollars A/C 539,999,994.19 3,350,664.18 TOTAL 574,297,761.92 3,574,832.59 Payments Goods(Fixed Assets) 176,720,334.20 1,071,032.33 Local Traniring L . 118,929,495.87 720,784,82 F'raign Traiining 1/2,085,620.37 1,137,183.25 Innovation Grantfor Research 72,047,792.37 436,653.29 Next World Bank Preparation Review Meetings 4,776,700.80 28,949.70 Incremental Operating Cost 16,878,421.17 102,293.46 Cash Book Balance as at 31st.12.2p18 :Li,859,397 A- - 72,935.74 TOTAL 574,297,761.92 3,574,832.59 SECOND HEALTH SECTOR DEVELOPMENT PROJECT COMPONENT II (IDA/WORLD BANK 191A 1/1, Anagarika Dharmapala Mawatha, Colombo 07 CASH - FOLW STATEMENT FOR THE YEAR ST ENDED 31 DECEMBER 2018 Source of Funds Note Funds Received Form For Previous Year 34,297,767.73 Special Dollar Account For Current Year 539,§99,994.19 574,297,761.92 Application of Funds Goods(Fixed Assets) 176,720,334.20 Local TranIning 118,929,495.87 Foreign Tranining 172,085,620.37 Inrovatin Grant for.Research 72,047,79237 Next World Bank Preparation Review Meetings 4,776,700.80 Incremental Operating Cost 16,878,421.17 561,438,364.78 561,438,364.78 Expendituer Over Recipts 12,859,397.14 Changes in working Capital Balance in the Cash Book 12,859,397.14 Current Assets Unsettled Advances 12,859,397.14 COND HEALTH SECTOR DEVELOPMENT PROJECT COMPONENT 11 (IDA/WORLD BANK FUNDED) 191A 1/11, AnagarikatDharmapala Mawatha, Colombo 07 Rconcilation of Special Doller Account IDA As at 31st December 2018 Account No: 7385 Depositoty Bank: oan Agreement: Credit NO: 5228LK US$ Rs. Opening Balance Month 929,497.12 142,078,096.38 1 772,465.39 2 307,540.06 3 1,168,122.35 4. 1,730,508.68 5. 401,407,34 6 220,527.99 7 1,598,737.17 .8 1,315,318.14 9 6,230,575.41 10 4,973,369.54 11 6,316,334.00 12 2,117,664.62 220,527.99 26,932,042.70 26,711,514.71 3 . 216,969,200.00 1,400,000.00 Recipt from WB 7 111,067,320.00 700,000.00 9 56,714,840.00 350,000,00 10. 119,653,170.00 700,000.00 504,404,530.00 504,404,530.00 1 99,999,999.00 (650,827.16) 3 99,999,998:63 (644,542.62) 5 99,999,999.92 (632,917.00) WATo WB g 99,999,999.40 (623,184.97) 9 59,999,999.96 (353,781.72) 11 39,999,998.84 (222,084.77) 12 39,999,998,44 (223,325.94) (539,999,994.19 539,999,994.19 728,832.94 133,194,146.90 SECOND HEALTH SECTOR DEVELOPMENT PROJECT COMPONENT 1l 191A 1/1, Anagarika Dharmapala Mawatha, Colombo 07 Trial Balance as at 31st .12.2018 Cr Dr, Procurment of Goods 176,720,334.20 Local Traninig 118,929,495.87 Foreign Traning 172,085,620.37 Foreign Travel Incremental and Oprational Cost 16,878,421.17 Inovation 72,047,792.37 -Meetings 4,776,70080 Cash Book Balance as at 31st.12.2017 12,859,397.14 Advance IDA Loan 574,297,761.92 TOTAL 574,297,761.92 574,297,761.92 1~1