Urban Council ------ District ------1. Financial Statements ------1.1 Presentation of Financial Statements ------The financial statements for the year 2018 had been presented for audit on 01 April 2019 and the summary report of the Auditor General on the financial statements and the detailed management report had been forwarded to the Chairman on 31 May 2019 and on 05 August 2019.

1.2 Qualified Opinion ------In my opinion, except for the effects of the matters shown under the basis for qualified opinion of this report, the financial statements of the Kesbewa Urban Council give a true and fair view of the financial position as at 31 December 2018 and its financial performance for the year then ended in accordance with Generally Accepted Accounting Principles.

1.3 Basis for Qualified Opinion ------(a) Accounting Deficiencies ------Audit Observation Recommendation Comments of the Accounting Officer ------(i) Rate received for in advance Should be accounted Accept. Action will be taken at the end of the year under correctly. to correct in future. review valued at Rs.3,512,864 has been shown to creditors without accounting as pre-payment..

(ii) Fuel deposits of Rs.1,045,000 Should be accounted Accept. Action will be taken and deposits of Rs.115,920 to correctly. to correct in the future. the Water Supply and Drainage Board, had been accounted under investments without being accounting under pre-payment accounts.

(iii) Arrears of receivable income Should be accounted Accept. Action will be taken valued at Rs.1,442,851, has correctly. to correct in future. been accounted under

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miscellaneous creditors in the financial statements, without being accounting under income of debtors.

(iv) Sum of Payables of Should be accounted Accept. Action will be taken Rs.1,529,380 for the month of correctly. to correct in future. November 2018 to the Waste Management Authority, had not been accounted.

(v) Compactor received valued at Should be accounted Accept. Action will be taken Rs.27,714,000 on payment correctly. to correct in future. basis, had been accounted under income debtors.

(b) Contingent Liability ------Audit Observation Recommendation Comments of the Accounting Officer ------Financial Statements eleven Contingent liabilities should Cases filed by the Council cases filed by outside parties be disclosed in financial and against the Council have against the Council, and a statements. been incorporated in the case filed by the Council financial statement, as against outsiders had not shown by the audit, been disclosed in the financial statements. (c) Unreconciled Accounts ------Audit Observation Recommendation Comments of the Accounting Officer ------An excess of Rs.1,331,734 and Accounts balances should be Accept. Action will be taken to shortage of Rs.1,178,956 had corrected after reconciling correct in the future. observed, when comparing the the differenses. balances of five accounts with the related subsidiary registers/ schedules in the financial statements.

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(d) Accounts Receivable and Payable ------Audit Observation Recommendation Comments of the Accounting Officer ------(i) The account balance of Action should be taken to Action will be taken to garbage charges receivable recover garbage dues. remove the outstanding was Rs. 2,655,916 at the end of balances before 2015 and year under review, and that 2016, because those includes outstanding balances outstanding arrived due to of Rs.191,688 due before incorrect billing. 2015, and Rs.235,703 due for the year 2016.

(ii) The Street lamp lighting aid of Action should be taken to Approval has been sought to Rs.481,578 from 2009 to 2014, recover outstanding balance write-off street lamp lighting and electricity charges of of street lamp lighting aid aid amounted Rs.254,748 Rs.110,054 from the and the electricity bill. out the of the amount of Piliyandala Sports Club for the Rs.481,578. The remaining year