Ceylon Leather Products had not fully accounted for advances given to its subsidiary, Ceylon Leather Products Distributors (Pvt) Ltd, and had understated a deferred tax liability in group accounts.

The Sri Lanka Accounting and Auditing Standards Monitoring Board said the firm was not in compliance with Sri Lanka Accounting Standards 3 (Presentation of Financial Statements), SLAS 14 (Income taxes) and SLAS 22 (Accounting for Investments).

Auditors Ernst and Young had qualified their report.

The watchdog said the corrected accounts showed Ceylon Leather group losses rising to 120 million rupees from 24 million and net assets falling to 833 million rupees from 929 million rupees.

In the company accounts losses rose to 140 million rupees from 23 million and net assets fell to 857 million from 974 million.

The Sri Lanka Accounting Standards Monitoring Board later issued a revised statement. Please go to updated story at this link.