By Devan Daniel
The Sri Lanka Accounting and Auditing Standards Monitoring Board (SLAASMB) has revised its non-compliance notice on Ceylon Leather Products PLC.
SLAASMB released a statement last week stating that Ceylon Leather Products had understated losses and overstated assets in its financials for the year ended March 2009.
SLAASMB, authorised to regulate and monitor how public- quoted companies prepare and present financial accounts to shareholders, said Ceylon Leather Products PLC had understated losses by Rs. 96 million while assets were overstated by the same amount in its consolidated accounts as at March 2009.
Ceylon Leather Products had not fully accounted for advances paid to subsidiaries while deferred taxes had been understated.
SLAASMB said the financial reports of Ceylon Leather Products were in violation of Sri Lanka Accounting Standards namely SLAS 3 dealing with the presentation of financial statements, SLAS 14 dealing with income taxes and SLAS 22 which deals with accounting for investments.
It said the company’s auditors Ernst and Young had qualified the financials in this respect.
Ceylon Leather Products was required to adjust its separate financial statements of the company and the consolidated statement.
Accordingly, in the separate financial statement of the company, losses were required to be increased by Rs. 117 million from Rs. 23 million as stated in its original statement to Rs. 140 million while net assets were required to be reduced from Rs. 974 million to Rs. 857 million.
Likewise, the consolidated account was expected to be revised by increasing the loss by Rs. 96 million accounted for as Rs. 24 million to Rs. 120 million while assets were to be reduced to Rs. 833 million from Rs. 929 million.
A company spokesman told the Island Financial Review that the matter had been resolved with SLAASMB and that no change was required in the consolidated financial accounts which reported a Rs. 24 million loss.
"Our auditors had qualified these issues and subsequently SLAASMB inquired into these transactions. We gave them our explanations and we were asked to make necessary adjustments in the financial statements for the year ending 2010," the spokesman said.
In a letter to the Colombo Stock Exchange, the company clarified further, "The increase in revaluation reserves has only increased the net asset value of the company. Therefore, recognising deferred tax liability of Rs. 96 million relating to re-valued property, plant and equipment would reduce revaluation reserves and thereby only affect net asset value of both the consolidated and separate accounts".
Last Friday, SLAASMB issued a statement revising its earlier notice.
In the separate financial statement of the company, the reported loss would have to be revised to Rs. 44 million (not Rs. 120 million) from Rs. 23 million while net assets are reduced to Rs. 857 million from Rs. 974 million.
The consolidated financial statement would not require any adjustments to losses while a reduction in net assets would be required to Rs. 833 million from Rs. 929 million.
source - www.island.lk
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