{"id":1792,"date":"2022-05-31T07:23:01","date_gmt":"2022-05-31T07:23:01","guid":{"rendered":"http:\/\/slaasmb.gov.lk\/?page_id=1792"},"modified":"2022-05-31T07:26:34","modified_gmt":"2022-05-31T07:26:34","slug":"observations-in-2020","status":"publish","type":"page","link":"https:\/\/slaasmb.gov.lk\/ta\/observations-in-2020\/","title":{"rendered":"Observations in 2020"},"content":{"rendered":"\n

Observations made on review of financial statements during 2020 <\/h1>\n
    \n

  1. Undertakings obtained from SBEs to make the required corrections<\/h4>\n

    Based on the materiality of the deviations from Sri Lanka Accounting Standards, SLAASMB\nobtained undertakings from two SBEs to make corrections in the preparation and presentation of\nfinancial statements. <\/p>\n

    Types of items for which the undertakings were obtained along with reference to the Sri Lanka\nAccounting Standards (Prefixed SLFRS\/ LKAS) not complied with by the SBEs are as follows;\n<\/p>\n

      \n
    • Failure to correctly identify the amounts by which financial statement line items are\naffected in the current reporting period due to the application of SLFRS 15 as compared<\/li>\nwith LKAS 18. (Reference; SLFRS 15 paragraph C3 (b) of Appendix C)\n
    • Failure to use possible multiple fair value techniques, in assessing the recoverable value\nof investment in associate using fair value less cost to sell method prescribed in LKAS 36.\n(Reference; SLFRS 13 paragraph B40)<\/li>\n<\/ul>\n

      Details of the undertakings obtained during the year 2020 are given in page < page no>.<\/p>\n<\/li>\n

    • Communication of Improvements to enhance compliance with standards<\/h4>\n

      Departures from Sri Lanka Accounting Standards detected, which were not material as to require\nthe use of procedures using statutory provisions, were informed to SBEs, as improvements, by\nletters, without extensive inquiries, so that the SBEs could, where necessary, improve on the\ncompliance, on their own.<\/p>\n

      The main findings relating to which improvements were communicated to SBEs in the form of\nletters of assistance are set out below;<\/p>\n

        \n
      • Not making adequate disclosures at the end of the reporting period, on the nature and extent\nof risks arising from financial instruments to which, the entity is exposed and of quantitative\nand qualitative information about the amounts arising from expected credit losses \u2013 in 83\nSBEs\n(Reference; SLFRS 7 paragraphs 31 to 42)<\/li>\n
      • Not making adequate disclosures relating to the nature of the related party relationships as\nwell as information about the transactions with related parties \u2013 in 76 SBEs including 18 in\nSME sector\n(Reference; LKAS 24 paragraph 18 and SME Section 33 paragraph 33.9)<\/li>\n
      • Not adequately disclosing the relationship between tax expense and accounting profit and\nof evidence to support recognition of deferred tax assets on tax losses \u2013in 68 SBEs including\n25 in SME sector\n(Reference; LKAS 12 paragraph 81and SME Section 29 paragraph 29.32)<\/li>\n
      • Not making adequate disclosures relating to valuation techniques used, inputs to the\nvaluation techniques, quantitative information about significant unobservable inputs used,\nsignificant adjustments made to the inputs and the fair value hierarchy, for each class of\nassets and liabilities measured at fair value \u2013 in 65 SBEs\n(Reference; SLFRS 13 paragraphs 91 and 93)<\/li>\n
      • Not considering all taxable temporary differences when recognizing deferred tax liabilities\nor, recognizing deferred tax assets in relation to carried forward tax losses irrespective of\nthe extent of availability of future taxable profits to utilize such unused tax losses \u2013 in 40\nSBEs including 13 in SME sector\n(Reference; LKAS 12 paragraphs 15, 24,34 and 48 and SME Section 29 paragraph 29.12)<\/li>\n
      • Not making adequate disclosures in relation to the basis of preparation of the financial\nstatements and the specific accounting policies and\/or significant accounting policies which\ncomprise of the measurement bases and other accounting policies, that are relevant for an\nunderstanding of the financial statements\u2013 in 35 SBEs\n(Reference; LKAS 1 paragraphs 112 and 117)<\/li>\n
      • Not recognizing a loss allowance for expected credit losses on a Financial asset that is\nmeasured at amortized cost when impairment indicators exist or not recognizing impairment\nlosses at the end of each reporting period when there are objective evidence of impairment\nin respect of a financial asset or group of financial assets \u2013 in 17 SBEs including 5 in SME\nsector\n(Reference; SLFRS 9 paragraph 5.5.1 and SME Section 11 paragraph 11.21)<\/li>\n
      • Not measuring the expected credit losses of a financial instrument to reflect the time value\nof money \u2013 in 16 SBEs\n(Reference; SLFRS 9 paragraph 5.5.17)<\/li>\n
      • Not disclosing all relevant information relating to revaluation of property plant and\nequipment \u2013 in 28 SBEs including 13 in SME sector\n(Reference; LKAS 16 paragraphs 77 and SME Section 17 paragraph 17.33)<\/li>\n
      • Not performing regular revaluations when fair values of revalued assets differ materially\nfrom the carrying amounts \u2013 in 10 SBEs\n(Reference; LKAS 16 paragraphs 31)<\/li>\n
      • Not estimating the recoverable amount of an asset when indication of impairment exist at\nthe end of the reporting period \u2013 in 9 SBEs including 2 in SME sector\n(Reference; LKAS 36 paragraph 8 and 9 and SME Section 27 paragraph 27.5)<\/li>\n
      • Not recognizing depreciation of an asset from the time the asset has been available for use\nor the depreciation method being used not reflecting the pattern in which the asset\u2019s future\neconomic benefits are expected to be consumed by the entity \u2013 in 9 SBEs\n(Reference; LKAS 16 paragraphs 55 and 60)<\/li>\n
      • Not preparing financial statements in compliance with Sri Lanka Accounting Standards and\nnot taking all necessary measures to ensure the financial statements are audited in\naccordance with Sri Lanka Auditing Standards, with the object of presenting a true and fair\nview of the financial performance and financial condition \u2013 in 8 SBEs\n(Reference; Act No 15 of 1995 Section 6 (1))<\/li>\n<\/ul>\n<\/li>\n<\/ol>\n","protected":false},"excerpt":{"rendered":"

        Observations made on review of financial statements during 2020 Undertakings obtained from SBEs to make the required corrections Based on the materiality of the deviations from Sri Lanka Accounting Standards, SLAASMB obtained undertakings from two SBEs to make corrections in the preparation and presentation of financial statements. Types of items for which the undertakings were […]<\/p>\n","protected":false},"author":1,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"footnotes":""},"class_list":["post-1792","page","type-page","status-publish","hentry"],"_links":{"self":[{"href":"https:\/\/slaasmb.gov.lk\/ta\/wp-json\/wp\/v2\/pages\/1792","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/slaasmb.gov.lk\/ta\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/slaasmb.gov.lk\/ta\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/slaasmb.gov.lk\/ta\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/slaasmb.gov.lk\/ta\/wp-json\/wp\/v2\/comments?post=1792"}],"version-history":[{"count":2,"href":"https:\/\/slaasmb.gov.lk\/ta\/wp-json\/wp\/v2\/pages\/1792\/revisions"}],"predecessor-version":[{"id":1794,"href":"https:\/\/slaasmb.gov.lk\/ta\/wp-json\/wp\/v2\/pages\/1792\/revisions\/1794"}],"wp:attachment":[{"href":"https:\/\/slaasmb.gov.lk\/ta\/wp-json\/wp\/v2\/media?parent=1792"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}