Notes to Financial Statements - Ministry of Finance and Planning

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14 | FINANCIAL STATEMENTS Statement of Accounting Policies Reporting Entity These Financial Statements are of the Government of the Democratic Socialist Republic of Sri Lanka and encompass the Reporting Entity of the Central Government comprised of Government Ministries, Departments, Special Spending Units and District Secretariats/ Kachcheris. Public Enterprises which comprised of Commercial Public Corporations, State Owned Enterprises and Government Owned Companies or other companies and Statutory Boards, and Provincial Councils are not covered in these Statements. However, cash outflows to those entities taken place during the reporting year and the Government’s total interest in the Commercial Public Corporations and State Owned Enterprises and Government owned companies or other companies held in the form of capital contribution and loans granted are accounted in these Financial Statements. Basis of Preparation These Financial Statements are prepared under historic cost convention in conformity with Generally Accepted Accounting Principles. Historical cost is applied as the measurement base. The cash based accounting is adopted. Reporting Period The reporting period of these Financial Statements is from 1st of January to 31st December 2012. Basis of Consolidation Expenditure incurred and revenue collected by respective Ministries & Departments in the form of financial assets, liabilities, revenues and expenses are consolidated using the same classification codes used for accounting those revenues and expenditures. Revenue The Central Government provides many goods, services and benefits that do not generate revenue, to the general public. The revenue is raised by way of taxes, levies, fees and charges imposed under various statutes approved by the Parliament to finance the expenditure incurred in provision of such goods, services and benefits. All such revenue collected through the relevant Ministries & Departments are identified and accounted at the time of collection. Investment Income is accounted for the period during which such income is actually collected. Premiums and Discounts Premiums and discounts on the issue of a debt instrument are treated as an adjustment against the cost of borrowings. Gains Gains arising from the sale of assets are accounted during the period in which the transaction occurs. Foreign exchange gains realized on monetary assets and liabilities are duly accounted in the Statements of Financial Position as at the end of the Reporting Period. Expenses All expenses are accounted in the period in which it is paid. Foreign Currency Transactions Transactions in Foreign currencies are converted into Sri Lankan Rupee using the exchange rate prevailed on the date of transaction. Exchange differences arising at the point of settlement of these transactions are duly accounted and presented in the Statement of Financial Performance. Investment Value of the Government’s equity investments in State Owned Enterprises is recorded at cost and shown separately in the financial statements. However, investments in Statutory Boards are not uniquely identified and disclosed since such entities operate like other Government Departments relying on the Government for their recurrent and capital expenditure requirements. Borrowings In the Statement of Financial Position, all local borrowings are recorded at cost. Since foreign borrowings are subject to variations in exchange rates such foreign monetary liabilities are converted in to Sri Lankan Rupees on the exchange rate prevailed at the end of the Reporting Period. Employee Entitlements Employee entitlements to salaries and wages, annual leave, pre-retirement leave and other similar benefits are recorded when they actually accrue to or utilized by the employees. Retired Government employee entitlements for their pension payments are also recorded on the same basis. 562
Ministry of Finance and Planning, Sri Lanka > Annual Report 2012 Statement of Accounting Policies Contingent Liabilities Contingent liabilities are recorded in the Statement of Contingent Liabilities at which point the contingency is evident. Comparatives To ensure consistency with the current period and classification method adopted in making a fair presentation of financial information, comparative figures have been restated where appropriate. Bank Overdraft The Bank Overdraft is comprised of all favourable and unfavourable cash book balances in the name of the Deputy Secretary to the Treasury, sum of unsettled imprest balances of Ministries and Departments which is treated as cash in transit and converted Rupee value of all foreign currency bank accounts as at the balance sheet date. Compilation of Government Finance Statistics The Budget Outturn presented in Economic Classification under Government Finance Statistics (GFS) varies from the information presented in these Financial Statements due to the different classification methods adopted for economic analysis. 563
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Note 34 Ministry of Finance and Pla
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Notes to Financial Statements - Ministry of Finance and Planning

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