lL &6 IåMrrl6)1 94. 6)A6( P -4-- N.- 30(172 , N . ;~,,, i,N .n~ . 94 11 2 8970 28 -34 V4 11 2 83 72 .2'ttiu~:cagvl w ..iJnrinrigvl *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 (IffAu_ ffarniw ZqWmmoffiLb 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. 4 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 5Ied/òÐ/edZ8/1/18/3 y 12018 å:63 0 My No. Your No. Date C-n gdneö m3C3w nc em30D qdz Qdcsd M3 tCM@ mo®wd aWMoeD 2018 eseabt@S 31 (emd qDead jbuc eaqwo o qma gom eOW ~S22 =@en mo £oM qDOso 8@oqD 2018 e-n 19 4c§nåon DW5- öw&d 12 Dm DOn,ac3 9=6O Ceobe 1. ge os 1.1 @Sc3 ~Comq Ed~ed w3 M8c3 e)o@e ewaeD ("wioeDd woa") 2018 sgea 31 ýme u» ddDoCe 5 esm~ e65 db3, 3 q Dow c eDbu o %cm MoAComO6 qmGåme, Mo85M &auee gome( o fd geim gqmm3 mm §CM gnimn oQo q Odwi 9®dadN®D e9TD p gnoqomzdecodý e&3 6ao cjUdÖC Q gd16Om ea@ ®w @C&S @mw qifed äod Saad0 änd 63® so&d qd@f , D. MoaaJ3 öemo ceedc @OOe®@092 D® mäd, o gÖO cnoOvx.9dD 2oe FO-&8 & eSåO® g®jbåodode eod o de eeo Sc3® do 9®adad®æ qO9fgmad e9t66c Wtd qad, e®® e soeqmjV:c mdddcozSßen @D Dnd opd 6392 &mjDzj deenn. D-®b wt CÖgn w126 @DO q&gcj&neö ®3a &Ed &ad~e nDC 85 Dad&C, WM@ I @q@C C oMJ g0 d g6oDÐ Dodsme =du c. noq, gumded qNeama 1 d qnte&D&afl coM @oGZ oEDoa fiege 2Bed coca @enJ ord edgod DiyÖdmi 2 qDaDm® e~dsoe c-@LD, goocd m gg C5D-ermood ca2 oad® ®0o@ ®(,OD eb ® eo. g®dao® eaae3 gmamcdeOd 9 SSäD ® m Do@eal Då @o E co1 g6C e qd, 2 * NATIONAL AUDIT OFFICE NAOSL t5da&50cO, 3 , c31=28, &w3B® eö qddC C ENdòoeDS DJO bac33 M 8(e99 £3 8&e enoud Wtou&C qnxnd comao®dQodqÐoWGJQad c@o cdna cý 25)d, q)525*» bacnecs e3~C8éO3 sg~Cncud qmjG? 6380 qýweS Meçm 8@ ®ed g&W3 d 6BDC, ecdozMaCC qccwn ä9ó 8 d ca®zdMt 0@3632 &(®!m ada Do gome3- 63•2i3m ,epo qqcönmwc& qa6) LDIed8 5ae z oq)@ 10C®o-^ qgood®æc Wd og. fgl43DG qe-L2D9o @d o 28 mo®nc 8 2Ö vts®Ð gem 6 œ@Q c5wgqåDê@ DeC ®ed EoGDcm Do3UneO qDCono ec@ qMd, 6@ @Wq?,6D g@oDd emeded )@ ®UoCd ®m8 83d GE ~c3. eme Q, qmaon 8ý525 et03 22dcöd ®u qaEJ& W{01d® qotöu CC WL75c. •ezwggó5 aacenqred ffic) g2@3QW)o (2ý5ed 638, CDnwc 65W gduðat)» qjoS®o (7,dzn( CPd26 dqu w aa 2 o22eçz r3) 843zý COM to ffadigB cý gmjmw)E)c tWed a0 q®ow Gx . ~csd U-fdMC ne zog,d Diçod Doda eemocmt , gC qwad0 oc22 åboenj z03 geoV 4Sd sgs884 e@cemo C53$Mó e eqoomDc Ej m d c= . 2. sDzd &~%% ws z9wåom z 89,aq Datboo 2018 q-n 19 m r3d6 &oeý ön&d own egezt qDoDcDd wa@ýDccd Uedu 9&5i4çm qtned sO. * 2018 ef-m 19 qd, eSam 5D em-d 12 (q) o9ecd eqwd qDonoud2 4jC, & cm ee1a qDcw sg &M dn@ wwa e w 8 £6e ® @a&3 C&8d oa de qnö, 8oed ee wn~ q37ÄCZ 23 c D3ba on aczý Mw1aco t Sdoeo &o * 2018 q-n 19 go- dagn c5oc omed 6 (1) (en) (iii) Dcoded wctodw qmc ~ eåtoaoÐ gem gnc>wm gnd C6O c88M qtådtö en. 3 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