People’s Leasing & Finance PLC
Report of the Auditor General on the Financial Statements and Other Legal and Regulatory Requirements of the People’s Leasing & Finance PLC and its subsidiaries for the year ended 31 March 2020 in terms of Section 12 of the National Audit Act, No. 19 of 2018.
The audit of the Financial Statements of the People’s Leasing & Finance PLC (the “Company”) and the Consolidated Financial Statements of the People’s Leasing & Finance PLC and its subsidiaries (the “Group”) for the year ended 3l March 2020 comprising the Statement of Financial Position as at 31 March 2020, and Statement of Profit or Loss, Statement of Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows for the year then ended, and notes to the Financial Statements, including a summary of significant accounting policies, was carried out under my direction in pursuance of provisions in Article 154 (1) of the Constitution of the Democratic Socialist Republic of Sri Lanka read in conjunction with provisions of the National Audit Act, No. 19 of 2018. My report to Parliament in pursuance of provisions in Article 154 (6) of the Constitution will be tabled in due course. To carry out this audit I was assisted by a firm of Chartered Accountants in public practice.
In my opinion, the accompanying Financial Statements of the Company and the Group give a true and fair view of the Financial Position of the Company and the Group as at 31 March 2020, and of their financial performance and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.
I conducted my audit in accordance with Sri Lanka Auditing Standards (SLAuSs). My responsibilities, under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of my report. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.
Key Audit Matters are those matters that, in my professional judgement, were of most significance in my audit of the Financial Statements of the current period. These matters were addressed in the context of my audit of the Financial Statements of the Company and the Consolidated Financial Statements of the Group as a whole, and in forming my audit opinion thereon, and I do not provide a separate opinion on these matters.
|Key audit matter||How our audit addressed the key audit matter|
|Impairment allowance for loans and receivables My audit considered impairment allowance for loans and receivables as a key audit matter. The materiality of the reported amounts for loans and receivables together with impairment allowance thereof, the subjectivity associated with management’s impairment estimation, involvement of complex manual calculations and increase in management overlays due to probable impacts of COVID-19 outbreak on the economy, underpinned my basis for considering it as a Key Audit Matter. As at 31 March 2020, 83% of its total assets of the Group consisted of loans and receivables amounting to Rs. 154,135 million (Note 25), net of impairment allowance of Rs. 9,170 million (Note 25). The Note 25.7 of the Financial Statements describes the basis of impairment allowance and assumptions used by the Management in its calculation.|| To assess the reasonableness of the impairment allowance, my audit procedures (among others) included the following:
For loans and receivables collectively assessed for impairment:
|Management’s assessment of possible effects of the COVID-19 outbreak on the nature and extent of risks arising from financial instruments and related disclosures Management has assessed the possible impacts of the COVID-19 outbreak on, nature and extent of risks arising from financial instruments and related Financial Statement disclosures are made considering the best available information up to the date of assessment, as more fully described in Section 59.1 of the Financial Statements. I considered such management’s assessment and related disclosures as a key audit matter, considering nature of business and use of significant management judgements and estimates considering future events and circumstances.||
My procedures included among other included the following:
The Financial Statements of the Company for the year ended 31 March 2019 were audited by another auditor who expressed an unmodified opinion on those statements on 13 June 2019.
Other information consists of the information included in the Group’s 2020 Annual Report, other than the Financial Statements and my Auditor’s Report thereon. Management is responsible for the other information. The Group’s 2020 Annual Report is expected to be made available to us after the date of this Auditor’s Report.
My opinion on the Financial Statements does not cover the other information and I will not express any form of assurance conclusion thereon.
In connection with my audit of the Financial Statements, my responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the Financial Statements or my knowledge obtained in the audit or otherwise appears to be materially misstated.
Management is responsible for the preparation of Financial Statements that give a true and fair view in accordance with Sri Lanka Accounting Standards, and for such internal control as management determine is necessary to enable the preparation of Financial Statements that are free from material misstatement, whether due to fraud or error.
In preparing the Financial Statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s and the Group’s financial reporting process.
As per Section 16 (1) of the National Audit Act No. 19 of 2018, the Group is required to maintain proper books and records of all its income, expenditure, assets and liabilities, to enable annual and periodic Financial Statements to be prepared of the Group.
My objective is to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditor’s Report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Sri Lanka Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Financial Statements.
As part of an audit in accordance with Sri Lanka Auditing Standards, I exercise professional judgement and maintain professional skepticism throughout the audit. I also:
I communicate with those charged with governance regarding, among other matters, significant audit findings, including any significant deficiencies in internal control that I identify during my audit.
National Audit Act, No. 19 of 2018 and Companies Act, No. 07 of 2007 includes specific provisions for following requirements:
Based on the procedures performed and evidence obtained were limited to matters that are material, nothing has come to my attention:
W P C Wickramaratne