Overview

This is the third consecutive annual report being presented to the National Assembly two months earlier than the statutory 'December' deadline. This has been done in response to a request for timely reports from various stakeholders including the National Assembly. More efforts are continuing, however, to reduce the time taken to produce annual reports even further and, hopefully, to present them at the end of September each year  With this in mind, the twelve-month audit cycle has been realigned to run from September to August.

The main purpose of this report is to:

(a) Draw the attention of the National Assembly, Government and other decision makers to matters arising from carrying out my oversight role as the Auditor General;

(b) Comment on various financial management and reporting, governance and administrative issues; and

(c) Highlight some matters of recurring nature and make some observations on the status of action taken or planned on previous audit reports.

The report presents the results of my audit of the Annual Financial Statements (AFS) of the Government for 2018 and various other audits undertaken in ministries, departments, officers and Agencies (statutory bodies) subject to my audit. These audits were completed during the audit cycle from September 2018 to August 2019. The matters included in this report are selective as they are the matters being brought to the attention of the National Assembly as per my reporting requirements. I am pleased to note that many matters raised in audit management letters issued to Accounting Officers throughout the audit cycle have been dealt with satisfactorily.

It is to be noted that this report does not include the results of numerous other audits, such as, performance audits carried out on my own initiative and the special audits carried out at the request of FPAC during the same audit cycle. The results of these audits have been included in separate reports which were submitted to the National Assembly and, subsequently, to the Government through the Cabinet for information and remedial action.

The audit of Annual Financial Statements (AFS) of Government is of paramount importance in public sector auditing. In this respect, my role is to provide assurance to the National Assembly that these statements properly presents the budget allocations, expenditure, revenue and other government's financial activities and the financial position for the year to which they relate. The Ministry of Finance is stepping up its efforts to produce better quality AFS, however, more needs to be done to ensure that the AFS are produced timely to enable auditing of the same by the statutory deadline (30th June) and fully in accordance with IPSAS framework to receive a clean opinion.

I note with satisfaction that a large number of statutory bodies arc now up to date with their annual accounts. I urge others to make more efforts to produce their annual accounts in a timely manner so that the auditing of the same could be undertaken in a timely manner and further reduce the audit backlog.

In general, the results of financial and compliance audits of Ministries, Departments, Divisions, Offices and Agencies (statutory bodies) are more or less similar and recurring. These are mainly the issues of non-compliance with prescribed financial procedures and instructions: breach of procurement regulations in the procurement of goods and services in public bodies: and in some instances, the essential accounting records and documents were either not kept or not updated timely, particularly, in the areas of stores, transport and fixed assets. This has impacted negatively on effective management of day to day operations and maintenance of proper and timely accounting records of many statutory bodies.

In this respect, at the time of writing, I note that Ministry of Finance has produced a new Accounting Manual to be rolled out in 2020. At the same time some essential amendments to the Procurement Act are also being discussed so as to provide a better framework for guiding public sector procurements.

Finally, readers are advised to refer to a complete set of the AFS of Government published by the Ministry of Finance to gain a comprehensive understanding of the structure of budget allocations, revenue collection, public debt and the results of other government financial operations and the financial position of Government at the end of 2018.

Gamini Herath
Auditor General

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