Finance Ministry clarifies ‘no financial crime’ in exchange rate reporting error

The Finance Ministry has clarified that a recent data entry error, highlighted in the ‘Report of the Auditor General on the Financial Statements of the Government’, did not result in any financial crime. The clarification came in response to media reports alleging financial improprieties related to the handling of a USD denominated loan.

The issue, documented on page 371 of the 2023 Final Budget Position Report, concerns the payment of $ 332,704 where an incorrect exchange rate of 524.6050 was recorded in the Commonwealth Secretariat – Debt Recording and Management System (CS-DRMS). This discrepancy arose from a data entry error, which was identified and corrected in the 2023 financial statements.

“Due to a data entry error, an incorrect foreign exchange rate was recorded in the database. As a result, the corresponding USD value was also recorded as an incorrect value in the database.

Therefore, whilst there was a data recording error, this did not affect the actual transaction value. This exchange rate data entry error has already been corrected in the financial statements in 2023,” the Ministry confirmed.

The Ministry emphasised that the payment was made in Sri Lankan rupees, and no US dollars were purchased using rupees at an inflated exchange rate, contrary to some media reports.

“Therefore, it is hereby confirmed that there has been no financial crime or any other such offense as reported by some media. The Ministry of Finance is currently working to publish the answers given to all the audit queries mentioned in the relevant Annual Report, which is expected to prevent similar misunderstandings going forward,” the statement read.

The Ministry also highlighted that they have provided responses to the Auditor General regarding the audit inquiry, as is standard practice. 

Finance Ministry acknowledged that errors can occur in an organisation handling thousands of loan transactions worth billions of rupees annually, whilst adding that it the responsibility of the audit to identify these errors and for the Ministry to rectify them.

The Ministry noted that it is working to publish all responses to the audit queries mentioned in the Annual Report to prevent similar misunderstandings in the future. “However, it is regrettable to observe that such reporting deficiencies, which have already been rectified, have been misrepresented as financial frauds/ financial crimes,” it added.