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Assurance Services / Audit

 

 

Audit gives an assurance about the business through audit reports. That is the level of confidence that auditors provide to stakeholders, indicating the accuracy and reliability of financial statements. It is the assurance that an auditor gives regarding whether the financial statements are free of material misstatements and whether they fairly represent the organization’s financial position.

There are different levels of audit assurance based on the type of audit or review conducted:

  1. Reasonable Assurance: This is provided in a full audit, where auditors thoroughly examine financial statements and related records. Though they don’t guarantee absolute accuracy (since audits involve sampling and professional judgment), reasonable assurance is high.
  2. Limited Assurance: This is typically provided in a review engagement, where auditors perform less extensive procedures than in a full audit. Limited assurance gives stakeholders some confidence that nothing has come to the auditor’s attention indicating major issues, but it doesn’t offer the depth of a full audit.
  3. No Assurance : This is found in a compilation engagement, where accountants compile financial data but do not perform any procedures to validate it.
 
What HMK Can Deliver

HMK has vital expertise through past history more than 30 years, ensuring adherence with the provisions of applicable laws and regulations in Sri Lanka. Further, HMK follows to the professional guidelines for Audit issued by the Institute of Chartered Accountants of Sri Lanka and ensures conformity in financials with the industry and corporate norms.

 

Internal Audits / Management Audits

 
 

An internal audit is an independent, objective assurance and consulting activity which is designed to add value and improve an organization’s operations. It helps an organization to achieve its goals by systematically evaluating and improving the effectiveness of risk management, control, and governance processes.

Key characteristics of internal audits include:

  1. Independence and Objectivity: Although internal auditors are part of the organization, they operate independently from the management of the processes they audit. This allows them to provide impartial and unbiased assessments.
  2. Focus on Risk Management and Controls: Internal auditors assess how well the organization manages risks (both operational and financial) and whether adequate internal controls are in place to mitigate those risks.
  3. Operational Efficiency and Compliance: Internal audits examine processes and operations to ensure they are efficient and compliant with internal policies, laws, and regulations.
  4. Consulting Role: In addition to providing assurance, internal auditors often consult management by recommending improvements in governance, internal controls, risk management, and business processes.
  5. Continuous Improvement: Internal audits typically occur on a regular or ongoing basis and aim to improve the organization’s operations over time.

Unlike external audits, which focus primarily on financial reporting for external stakeholders, internal audits are designed to help management make informed decisions and improve overall organizational performance.

 
What HMK Can Deliver

We evaluate the accounting and internal control system of the entity and develop internal audit plan, conducting internal audit assignments, and issuing an audit reports based on key findings and observations to the management together with our best recommendations. We also actively participate in Audit Committee meetings, providing insights and contributing to discussions on audit outcomes and recommendations

Tax Services

 
 

HMK offers services and tax advices relating to taxation of following areas and business according to the Inland revenue regulations. HMK are in the correct position to help through our extensive knowledge of taxation and general practice followed by Inland Revenue Department to give best outcome for tax burden and planning on tax payments.

What HMK Can Deliver

  1. Individual – Computation of Individual Tax liability, Filing of Income tax return with the Department of Inland Revenue (IRD)
  2. Company – Computation of corporate / company Tax liability, Filing of Income tax return with the IRD.
  3. Partnership – Computation of Partnership Tax liability, Filing of Income tax return with the IRD.
  4. Tax Planning and advices – Managing and advising of tax expenses effectively and assessments issued by the IRD.

          Latest tax legislations – Advice on changes in tax law and rulings

  1. Processing and submission of VAT
 
 

Finance Outsourcing

Finance function outsourcing involves contracting an external provider to handle specific finance and accounting tasks for an organization. This arrangement allows businesses to focus on core activities while benefiting from specialized expertise and, often, cost savings. Companies typically outsource functions like bookkeeping, payroll, tax compliance, and financial reporting.

Here are some key benefits and components of finance function outsourcing:

  1. Cost Efficiency: By outsourcing, companies can reduce the costs associated with hiring, training, and maintaining an in-house finance team. It often reduces overhead expenses and can be scaled up or down based on business needs.
  2. Access to Expertise: Outsourcing gives businesses access to specialized finance professionals and advanced technologies that may otherwise be cost-prohibitive, especially for small or medium-sized businesses.
  3. Improved Focus on Core Activities: By delegating finance tasks, companies can redirect internal resources toward strategic functions like growth and product development.
  4. Enhanced Compliance and Risk Management: External providers are often well-versed in regulatory requirements and best practices, which helps minimize compliance risks.
  5. Scalability and Flexibility: Outsourced finance solutions can adapt to changing business needs, such as growth, expansion into new markets, or shifts in regulatory requirements.
  6.  

Popular finance functions often outsourced include accounts payable and receivable, payroll, financial reporting, budgeting and forecasting, tax preparation, and financial analysis. This arrangement is increasingly common as companies look to streamline their operations and leverage external expertise for improved efficiency and strategic advantage.

WHAT HMK CAN DELIVER:

We will undertake following functions.

  • Accounting and book keeping functions
  • Payment processing
  • Receipting Process
  • Reconciliation of stocks and bank accounts
  • Monthly payroll management and Salary Payment processing
  • Inventory Management system

Business Advisory/

Project Reports/ Financial Projections

 
 

 

Business Advisory

Business advisory services are professional consulting services that help organizations improve their performance, solve specific business challenges, and achieve strategic goals. These services are typically provided by consultants or specialized firms that offer expert guidance across various areas of business, such as finance, strategy, operations, technology, and compliance.

Key components of business advisory services include:

  1. Strategic Planning and Growth: Advising on long-term strategies, market expansion, and growth opportunities. This may include developing business plans, competitive analysis, and market entry strategies.
  2. Financial Advisory: Providing insights on financial planning, budgeting, cash flow management, and capital structure to improve financial health and performance. Services often include financial modeling, valuation, and cost optimization.
  3. Risk Management: Assessing potential risks, both internal and external, and implementing strategies to manage or mitigate them. This can include compliance, cybersecurity, operational, and financial risk assessments.
  4. Operational Efficiency: Identifying ways to streamline operations, improve processes, and increase productivity. Consultants may help redesign workflows, optimize supply chains, or enhance service delivery models.
  5. Technology and Digital Transformation: Advising on digital initiatives, IT infrastructure, and emerging technologies that can drive innovation and competitiveness, such as automation, data analytics, and digital marketing.
  6. Human Resources and Organizational Development: Offering guidance on talent management, leadership development, and organizational restructuring to improve employee engagement and drive cultural change.
  7. Compliance and Regulatory Advice: Ensuring the business meets local, national, and international laws and regulations, especially for industries with heavy regulatory oversight, such as finance, healthcare, and manufacturing.
  8.  

By leveraging business advisory services, organizations can gain outside expertise and objectivity to make more informed decisions, improve their competitive positioning, and drive sustainable growth.

What HMK Can Deliver
 

We will streamline the current business environment and provide recommendations as to how the business would be able to create more value.

 

Project Report

 

A project report is a detailed document that provides a comprehensive overview of a project’s progress, goals, milestones, challenges, and outcomes. It serves as a key communication tool for project stakeholders, helping them understand the project’s current status, any issues encountered, and what needs to happen next to reach completion.

Here are some of the main components of a project report:

  1. Executive Summary: A high-level overview of the project, its objectives, key findings, and a summary of progress made so far. This section is particularly helpful for stakeholders who may not need to dive into the detailed sections.
  2. Project Objectives: A clear outline of the project’s purpose, goals, and scope. This includes the problem being addressed, the intended benefits, and the success metrics.
  3. Project Plan and Timeline: A breakdown of the phases of the project, key milestones, deadlines, and a timeline for the project’s completion. This may include Gantt charts or timelines for visualization.
  4. Status Update: Details on the current progress, highlighting completed tasks, tasks in progress, and any tasks that are behind schedule.
  5. Budget and Financial Analysis: An outline of the project’s financials, including budgeted vs. actual costs, remaining budget, and any expected financial adjustments.
  6. Challenges and Risks: Identification of any issues or risks encountered, such as resource constraints, delays, or technical issues. This section also typically includes a risk mitigation plan.
  7. Performance Metrics: Evaluation of the project against key performance indicators (KPIs) and success criteria set at the beginning of the project.
  8. Next Steps and Recommendations: A plan for the remaining work, including the next steps, tasks, or phases to complete. Recommendations on addressing issues or optimizing processes may also be included.
  9.  

Project reports are typically created periodically throughout the project’s lifecycle (e.g., weekly, monthly, or at each project phase) to keep stakeholders informed, facilitate decision-making, and ensure the project stays on track. They are often used in fields such as project management, finance, engineering, and construction to track and communicate project progress.

What HMK Can Deliver
 

Project reports are typically created periodically throughout the project’s lifecycle (e.g., weekly, monthly, or at each project phase) to keep stakeholders informed, facilitate decision-making, and ensure the project stays on track. They are often used in fields such as project management, finance, engineering, and construction to track and communicate project progress

 

Financial Projections

 

Financial projections are estimates of a business’s future financial performance, including expected revenues, expenses, and cash flows over a specific period. These projections are typically used for planning, budgeting, and strategic decision-making. They are essential for businesses seeking to understand their financial future, attract investors, secure loans, or evaluate new initiatives.

Here are some key components of financial projections:

  1. Revenue Projections: Estimates of future sales based on historical data, market research, and anticipated demand. These projections help forecast how much income the business expects to generate.
  2. Expense Projections: Expected costs required to operate the business, including fixed costs (e.g., rent, salaries) and variable costs (e.g., materials, commissions). Expense projections help assess profitability and plan for cost management.
  3. Cash Flow Projections: Estimates of cash inflows and outflows to understand the business’s liquidity position. Cash flow projections are crucial for determining if a business will have enough cash to cover expenses and invest in growth.
  4. Income Statement Projections: Forecasts of future profit or loss, detailing revenue, cost of goods sold, gross profit, operating expenses, and net income. These statements provide a big-picture view of expected profitability.
  5. Balance Sheet Projections: Projections of assets, liabilities, and equity to understand the business’s financial position over time. This includes estimates of inventory, accounts receivable, accounts payable, and other financial items.
  6. Break-Even Analysis: An assessment of the point at which total revenue equals total costs, indicating when the business will become profitable. This analysis helps set targets and goals for covering expenses.
  7. Assumptions: Key assumptions underlying the projections, such as growth rates, market conditions, pricing changes, and inflation rates. These assumptions provide context and allow stakeholders to understand the basis of the projections.
  8.  

Financial projections can cover short-term periods (e.g., quarterly or annually) or long-term horizons (e.g., three to five years). They are vital for setting financial goals, tracking progress, and identifying areas that may need adjustment.

What HMK Can Deliver
 

We will do Financial projections that can cover short-term periods (e.g., quarterly or annually) or long-term horizons (e.g., three to five years). They are vital for setting financial goals, tracking progress, and identifying areas that may need adjustment.  Sometimes these projections seek by bankers to grant loans.

 

Due Diligence Audits

 

 

A due diligence audit is a comprehensive assessment conducted before a major business transaction, such as a merger, acquisition, or investment. This audit aims to evaluate the target company’s financial health, legal compliance, operational efficiency, and potential risks to ensure that the acquiring or investing party has a clear and accurate understanding of what they are buying or investing in. It helps identify any red flags, risks, or opportunities that could impact the transaction’s value or success.

Key components of a due diligence audit include:

  1. Financial Due Diligence: A detailed review of the target company’s financial statements, revenue, expenses, profit margins, cash flows, and financial forecasts. The goal is to verify financial accuracy, stability, and growth potential.
  2. Legal Due Diligence: Examination of all legal matters, including contracts, intellectual property rights, regulatory compliance, litigation history, and any pending or potential legal issues that may impact the transaction.
  3. Operational Due Diligence: Analysis of the company’s operations, including supply chain, production processes, efficiency, and quality controls. This review assesses if the business can maintain or improve its operational performance after the transaction.
  4. Tax Due Diligence: Review of the company’s tax compliance, including past filings, tax liabilities, tax strategies, and potential exposure to tax-related risks.
  5. Human Resources and Cultural Due Diligence: Evaluation of the company’s workforce, employee contracts, compensation structures, turnover rates, and overall workplace culture. It also identifies potential liabilities, such as unfunded pension obligations.
  6. IT and Cybersecurity Due Diligence: Assessment of the company’s IT infrastructure, software systems, data security, and cyber risk exposure. This is crucial for identifying vulnerabilities that could lead to data breaches or system failures.
  7. Environmental Due Diligence: For industries that impact the environment, this component reviews compliance with environmental regulations and assesses any liabilities associated with environmental issues, such as waste management or pollution.
  8. Market and Commercial Due Diligence: Analysis of the company’s market position, customer base, competition, and overall industry outlook. This helps the buyer understand if the business has sustainable market demand and competitive advantages.
  9.  

Due diligence audits help buyers make informed decisions, negotiate better terms, and mitigate risks associated with the transaction. It often involves a team of specialists, such as auditors, lawyers, tax advisors, and industry experts, to ensure a thorough and unbiased evaluation.

What HMK Can Deliver
 

Due diligence audits help buyers make informed decisions, negotiate better terms, and mitigate risks associated with the transaction. It often involves a team of specialists, such as auditors, lawyers, tax advisors, and industry experts, to ensure a thorough and unbiased evaluation

 

Risk Managements

 

Risk management is the process of identifying, assessing, and mitigating risks that could negatively impact an organization’s objectives, assets, or operations. Effective risk management allows organizations to anticipate potential issues, minimize negative outcomes, and make informed decisions. It’s essential in fields such as finance, healthcare, engineering, and business operations where uncertainty and exposure to risks are high.

The key steps in risk management include:

  1. Risk Identification: Recognizing potential risks that could affect the organization. These risks could be financial, operational, strategic, regulatory, or reputational. Identifying risks early is crucial to addressing them proactively.
  2. Risk Assessment: Analyzing the likelihood and impact of each identified risk. This often involves evaluating how likely each risk is to occur and estimating the potential consequences if it does. Risks are typically ranked or prioritized based on this assessment.
  3. Risk Mitigation or Treatment: Developing strategies to minimize or eliminate risks. Common strategies include:
    • Avoidance: Eliminating the activity or process that exposes the organization to risk.
    • Reduction: Implementing measures to lessen the risk’s likelihood or impact, such as adding controls or safeguards.
    • Transfer: Shifting the risk to another party, such as through insurance or outsourcing.
    • Acceptance: Acknowledging the risk when it’s low-impact or unavoidable and setting aside resources to handle it if it occurs.
  4. Monitoring and Reviewing: Continuously tracking risks and assessing the effectiveness of mitigation strategies. This ensures that new risks are identified promptly and that existing mitigation efforts remain effective, especially in dynamic environments.
  5. Communication and Reporting: Keeping stakeholders informed about key risks, mitigation efforts, and any changes in risk status. This promotes transparency and ensures that risk management is integrated into decision-making processes.
  6.  

Risk management is critical for organizations as it helps protect against losses, ensures compliance with regulations, and supports long-term sustainability. Additionally, it enhances resilience, allowing organizations to recover more effectively from unexpected events.

What HMK Can Deliver
 

We will do Risk management function of organizations as it helps protect against losses, ensures compliance with regulations, and supports long-term sustainability. Additionally, it enhances resilience, allowing organizations to recover more effectively from unexpected events

 

Accounting & Internal Control Managements

 

An accounting and internal control system is a framework of policies, procedures, and processes designed to ensure the accuracy, reliability, and integrity of financial reporting, compliance with laws and regulations, and the effective management of an organization’s assets. This system is essential for preventing and detecting errors, fraud, and inefficiencies in an organization’s financial and operational activities.

Key Components of an Accounting and Internal Control System

  1. Segregation of Duties: Dividing responsibilities among different employees to prevent any single individual from having control over all aspects of a financial transaction. This reduces the risk of errors and fraud.
  2. Authorization and Approval Processes: Establishing procedures that require management to authorize and approve financial transactions, purchases, and other critical business activities. This ensures only valid transactions are recorded.
  3. Recordkeeping and Documentation: Maintaining accurate and timely records of all financial transactions, supported by proper documentation, to verify each transaction’s validity. This documentation provides an audit trail, making it easier to detect and investigate discrepancies.
  4. Reconciliation Procedures: Regularly comparing financial records (e.g., bank statements) with internal records to identify and correct discrepancies. Reconciliation helps verify that the recorded transactions match actual assets and liabilities.
  5. Physical and IT Controls: Implementing physical safeguards, such as locks and secure access, to protect tangible assets like cash, inventory, and equipment. IT controls protect digital assets and data, such as user authentication, data encryption, and access controls.
  6. Budgeting and Financial Reporting: Regularly preparing and reviewing budgets and financial reports to monitor financial performance. This allows management to identify variances, assess financial health, and make informed decisions.
  7. Risk Assessment: Continuously identifying and assessing financial and operational risks to determine areas that require additional controls. This is essential for adapting the control system to changing business conditions and regulatory requirements.
  8. Monitoring and Auditing: Regularly reviewing and evaluating internal controls to ensure they are effective and updated as necessary. Internal audits and periodic assessments help identify weaknesses and improve the control environment.

Objectives of an Accounting and Internal Control System

  • Accuracy and Reliability: Ensures that financial statements are accurate and provide a true reflection of the organization’s financial status.
  • Compliance: Helps the organization comply with applicable laws, regulations, and accounting standards.
  • Fraud Prevention and Detection: Minimizes the risk of fraud and errors by establishing checks and balances.
  • Operational Efficiency: Improves the effectiveness of operations through streamlined processes and preventive controls.
  • Safeguarding Assets: Protects the organization’s resources, both physical and financial, from unauthorized use or theft.
  •  

A well-designed accounting and internal control system is vital for supporting good governance, protecting assets, and fostering stakeholder trust in the organization’s financial and operational stability.

What HMK Can Deliver
 

We will evaluate and re-designed accounting and internal control system supporting good governance, protecting assets, and fostering stakeholder trust in the organization’s financial and operational stability and issue our recommendations.

 
 
 

Secretarial Services

 

What HMK Can Deliver
 
  1. Incorporation/ Registration of new companies
  2. Drafting Articles for limited liability companies
  3. Performing duties and regulatory requirements with the ROC (Registrar of Companies in Sri Lanka)
  4. Acting as a secretary of companies (Drafting meeting minutes/ Circulating minutes and passing board resolutions of companies)
 

Payroll Managements

 

What HMK Can Deliver
 
  1. Maintaining Pay roll of any company by us
  2. Payment of monthly salary to individual employees’ accounts
  3. Registration of employers with the EPF, Registration of employees with the EPF, maintaining individual employee personnel file on behalf of the company, Payment of monthly EPF/ ETF, Maintaining Gratuity related payments. Issuing appointment letters and all other updated on the personnel files.
 

Hello everyone, thank you for visiting us today!

We are happy to talk how our audit, tax, accounting and other practices can serve you!

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+94 112 894 764

Email

office@hmk.lk

Address

No 60A, Akarawita Mawatha, Katuwana Road, Homagama.

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