SLAASMB detects flaws in annual reports

Sri Lanka Accounting and Auditing Standards Monitoring Board (SLAASMB) has obtained undertakings from specified business enterprises to make corrections in financial statements which require changes in net profit and equity amounting to Rs 1.2 billion in 2010.

Failure to recognize impairment of investment in equity, not making allowance in respect of doubtful debts, failure to recognize part of the surplus arising from a revelation, failure to carry out revaluations with sufficient regularity, recognition of a gain expected from a contingent asset in the form of a capital reserve, failure to prepare and present consolidated financial statements, where control over a subsidiary was acquired during the financial period and others were the types of items for which undertaking were obtained.

SLAASMB also made observations on audit reviews.

Accordingly SLAASMB reviewed 30 audits carried out by 16 firms during 2010. Audits reviewed included 15 carried out by members of international network firms.

Deficiencies were identified in 20 audits conducted by 15 firms. The identified departure from Sri Lanka Auditing Standards detected were communicated to the respective firms in the form of letter of assistance.

Items not sufficiently documented, failure to obtain sufficient appropriate audit evidence, failure to establish the audit materiality level , overall audit plan and audit program ,analytical procedures, understanding and assessment of control risk , test performed on experts work , related part transactions were the main findings on audits. IH