26 Jul, 201306:32:48
July 26, 2013 (LBO) - Accounts of 18 state enterprises and agencies had been disclaimed by auditors, while another 04 had adverse opinions, some for two years running, while some others had not even submitted annual reports, a parliamentary report said.
An adverse audit opinion refers to an occasion when an auditor finds enough information to show that accounts do not show a true and fair view of an entity. A disclaimer is issued when an auditor cannot even form an opinion based on the accounts available. A report by the bipartisan Committee on Public Enterprises (COPE) of Sri Lanka's parliament said state enterprises including Janatha Estate Development Board, Sri Lanka State Plantations Corporation, Ayurvedic Drugs Corporation have been disclaimed for in both 2010 and 2011. Accounts of the Co-operative Wholesale Establishment, Paddy Marketing Board and Ceylon Fishery Harbhour Corporation, had been disclaimed in 2010. Colombo Commercial Fertilizer Limited accounts have been disclaimed in 2011. Accounts of other entities, including Saumyamorrthi Thondaman Memorial Foundation, University of Peradeniya, Postgraduate Institute of Agriculture, Vocational Training Authority, Land Reform Commission, National Youth Services Council and National Institute of Fisheries and Nautical Engineering had been disclaimed in 2010 and 2011. Accounts of the University of Kelaniya and Open University of Sri Lanka had been disclaimed in 2010. Adverse audit opinions had been issued on the Sri Lanka Council for Agricultural Research Policy and National Library and Documentation Services Board for 2010. For 2011 accounts adverse opinions had been issued for the Institute of Indigenous Medicine and Open University of Sri Lanka. Detailed reasons for disclaimers and adverse opinions were not elaborated in the report. The report said many state agencies had not even submitted their annual reports to parliament through they were required to do so within 150 days of closing accounts. The situation however was better than in 2010 when COPE began its sittings. The committee had gone into the accounts of 244 agencies and the July report dealt with 211 agencies out of which more than 70 were commercial enterprises. The COPE said some state enterprises were not submitting annual reports to parliament saying they were set up under the Companies Act. State corporations are expected to be set up under a specific act of parliament for good governance. By June 2013, 18 percent of entities had not submitted 2009 accounts and 29 percent had not submitted 2010 accounts that were outside the companies act. But some firms which were set up under the companies act had given annual reports to parliament. Some firms were using private external auditors and not the Auditor General, the report said. The COPE report said many state agencies did not have internal auditors and audit departments."The Internal Audit function of certain public enterprises was found to be inadequate mainly due to the shortage of staff…" the report said. "Further, it identified certain institutions with no internal audit division at all. Effective internal audit secure the financial accountability of the institution, and it also reduces the work load of the Auditor General." An internal audit department could take action against frauds quickly the report said. Analysts say Sri Lanka corruption and fraud in the state as well as a breakdown in the general rule of law of the country started with the breaking of the independent public service through the 1971 and 1979 constitutions. Analysts have warned that without an independent public service and judiciary, it will not be possible to re-establish rule of law, justice and freedom.