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Table of Contents Table of Contents ............................................................................................................................ 1

Prelude ............................................................................................................................................ 3

Act No. 15 of 1973.......................................................................................................................... 4

VISION ........................................................................................................................................... 6

MISSION ........................................................................................................................................ 6

STRATEGIES................................................................................................................................. 6

Board of Directors for year 2006 .................................................................................................... 7

Appointed Members.................................................................................................................... 7 Nominated Members ................................................................................................................... 7

Board Meetings ............................................................................................................................... 7

Information on Projects undertaken in the year 2006 ..................................................................... 8

1. Name of the Project: Poultry Farming Project ........................................................................ 8

2. Name of the Project: Mushroom Cultivation Project ............................................................. 8 3. Name of the Project: White Pepper Production ...................................................................... 8

4. Name of the Project: Activities to sustain the phase 1 of the Buttala Project ........................ 8 5. Name of the Project: Plant Nursery Project, Head Office ...................................................... 9

6. Name of the Project: Farmer Product Selling Center ............................................................. 9 7. Name of the Project: Rain Water Harvesting Project – Thantirimalya .................................. 9 8. Name of the Project: School Rain Water Harvesting Project – Polonnaruwa ........................ 9

9. Proposals Submitted: .............................................................................................................. 9 Audit Report - 2006 ...................................................................................................................... 11

Annual Accounts – 2006 ............................................................................................................... 17

Audit Reply ................................................................................................................................... 38

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Prelude Sri Lanka National Freedom from Hunger Campaign Board is a statutory Board established by

an act – No 15 of 1973. The Board comes under the purview of Ministry of Agrarian Services

and Development of Farmer Communities.

Mr. Maduwe A.J.S. Navarathne served as the Chairman of the Board.

Four Board Meetings were held during the Year.

On 5th

April the Dehiwela Farmer Product Selling Center was inaugeated with patronage of the

Hon. Minister of Agrarian Services and Development of Farmer Communities Hon. Mr. S.M.

Chandrasena.

Three Telefood projects were carried out at Dunumala, Kotuwegedara and Hatamunagala with

aid from the Food and Agriculture Organization. World Food Program provided Rs. 400,000 to

sustain the activities at Buttala. Farmer Product Selling Center at Dehwela and the Plant

Nurseries at Narahenpita & Dehiwela shows tremendous progress providing yeoman services to

the people and earn substantial amount of profit. Rain Water Harvesting Projects at

Thanthirimale and Polonnaruwa were carriedout. Several project proposals were submitted to

find donors.

The Department of Management Services and cadre committee accepted the Board’s cadre

allowing only 22 employees.

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ANNUAL REPORT 2006

The Sri Lanka National Freedom from Hunger Campaign Board (FFHC – Sri Lanka) is a

statutory body under the purview of the Ministry of Agriculture constituted by an Act of

Parliament in 1973 with the auspices of UN – FAO. Initially, the Board operated as a facilitator

and coordinating body to the foreign funded projects. Since 1978 the FFHC – Sri Lanka is

directly implementing various community development projects aiming to alleviate poverty

among the most vulnerable and marginalized groups in Sri Lanka.

Act No. 15 of 1973 The general objectives of the Board are:

1. To secure the aid of non-governmental agencies, both foreign and local, for social and

economic development in accordance with the programme of development formulated by

the Government.

2. To assist institutions and other bodies in carrying out schemes of public utility, social

welfare an economic development.

3. To aid promote and coordinate specific projects directed towards agricultural and

industrial development

4. To estimate non-governmental agencies in the implementation of projects for increasing

agricultural and industrial production

5. To collaborate with the International Freedom from Hunger Campaign and other similar

institutions, associations or societies abroad.

The Board shall in furtherance of the objects of the Board, have the power;

1. To receive aid and donations in cash, equipment or in any other from non-governmental

sources;

2. To disburse such aid and donations on such terms and conditions as the Board may deem

necessary;

3. To review and coordinate the activities of non-governmental agencies receiving

assistance in cash, goods or services from foreign sources

4. To call for reports on the activities of non-governmental agencies receiving aid in cash or

services from non-governmental sources for the purposes specified in section 3;

5. To negotiate with non-governmental organizations, both foreign and local, for the grant

of aid for approved projects;

6. To sell or otherwise dispose of commodities received by way of aid from non-

governmental sources;

7. To hold, take on lease, rent, hire or mortgage any movable or immovable property;

8. To negotiate and enter into contracts or agreements and vary or rescind such contracts or

agreements;

9. To sell, manage, transfer, exchange, mortgage, lease hire or otherwise dispose of any

movable or immovable property;

10. To impose and recover charges for services rendered by the Board;

11. To recover, in appropriate cases, the rupee value of aid or donations whether in cash,

commodities or equipments received from foreign non-governmental sources and

channeled to local recipients;

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12. To establish and maintain information and educational services;

13. To draw, make, accept, endorse and discount cheques, notes or other negotiable

instruments for the purposes of the Board;

14. To pay all expenses preliminary or incidental to the establishment of the Board and the

management and administration of its affairs;

15. To do all such other things as the Board may think it necessary, incidental or conducive

to the attainment of its objectives;

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VISION To identify and implement programs aimed at restoring the dignity of the farming community

and the under privileged to ensure their economic independence with gaining self-reliance as the

key motive.

MISSION To implement programs that call for active participatory involvement and skills development of

beneficiaries in the fields of agriculture, livestock development and other fields to make for

economic independence and to wean them away from the culture of dependence.

STRATEGIES Integrating development initiatives towards a common goal

Creating opportunities for the rural people to participate in economic growth and socio

cultural development

Empowering the rural people to participate fully in the development process

Transforming traditional rural communities into self-reliance with achievement oriented

values as well as capabilities for self-propelled sustainable development.

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Board of Directors for year 2006

Appointed Members

Name Position Date Appointed

Mr. Maduwe A.J.S. Navaratne Chairman 12/12/2005

Mr. H.B. Maheepala Vice Chairman 05/01/2006

Mr. S.R.S. Katriarrachchi Director 05/10/2006

Mr. D.R.G. Rambanda Director 18/01/2006

Nominated Members

Name Position Date

Appointed

Representation From

Mrs. Kamala

Uyanwatta

Additional Secretary

(Administration)

22/02/2006 Ministry of Agriculture,

Irrigation and Mahaweli

Development

Mr. P.D.W.

Jayawardhane

Additional Secretary

(Acting)

22/02/2006 Ministry of Plantation Industries

Mr. D.

Wijesiriwardhane

Assistant Secretary 21/04/2006 Ministry of Finance and Planning

Mr. Nanadasena

Perera

Director

(Development)

10/06/2004 Ministry of Agrarian Services

and Development of Farmer

Communities

Board Meetings Four Board meetings were held during the period. They are;

Board Meeting Number Date

304 24/04/2006

305 16/06/2006

306 27/10/2006

307 12/12/2006

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Information on Projects undertaken in the year 2006

1. Name of the Project: Poultry Farming Project

Location of the Project: Dunumala, Kegalle District

Donor: Food and Agriculture Organization

Amount: $ 10,000

Number of Beneficiaries: 12 Females

Description: 12 women from Dunumala Village were selected and provided with 100 chicks,

poultry house and poultry feed until layering become 50%. At the end of the project, all are

obtaining nearly 90 eggs per day.

2. Name of the Project: Mushroom Cultivation Project

Location of the Project: Kotuwegedara, Matale District

Donor: Food and Agriculture Organization

Amount: $ 10,000

Number of Beneficiaries: 22 Females

Description: 22 women from Kotuwegedara village were selected and one day training

program on Mushroom Cultivation were provided at Mushroom Training Center, Gannoruwa.

They were provided with mushroom houses and all necessary utensils and seeds. At present

most of them are getting a good harvest of Mushroom and earn a good income daily.

3. Name of the Project: White Pepper Production

Location of the Project: Hatamunagala, Matale District

Donor: Food and Agriculture Organization

Amount: $ 16,000

Description: 150 pepper farmer were grouped into a society and provided with machinery and

a common building to prepare white pepper. They were trained on the technology to prepare

white pepper. Since white pepper fetched very high price than the black pepper now their

income is satisfactory.

4. Name of the Project: Activities to sustain the phase 1 of the Buttala Project

Location of the Project: Buttala, Monragala District

Donor: World Food Program

Amount: Rs. 400,000.00

Description: 158 farmers of the project were provided with 18 training sessions on following

topics;

o Training on Field Crop Production

o Training on Animal Husbandry

o Training on Compost Fertilizer Utilization

o Training on Post harvest Technology

o Recognition of their new requirements by using PRA

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5. Name of the Project: Plant Nursery Project, Head Office

Location of the Project: Narahenpita, Dehiwela – Colombo District

Donor: Self Funded

Amount: Rs. 500,000.00 initial

Description: This is a project implemented with the view of generating funds for the Board.

Started on the April of last year it shows a great potential. Urban people fulfill their fruit,

forest, vegetable, ornamental plants and seeds, compost, pesticide, weedicide and agriculture

equipment requirements through this service. Further, extension services also are provided

through this.

6. Name of the Project: Farmer Product Selling Center

Location: Dehiwela, Colombo District

Donor: Self Funded

Amount: Rs. 1,500,000.00

Description: This also is a project implemented with the view of generating funds for the

Board. Started on April of this year it shows a great potential. It has 3 components, namely

milk product centre, vegetable selling center and grain selling centre. 11 employees are

working in the centre on contract basis and provide yeoman service to the people in the area by

providing needy goods for very low prices. The special feature of this project is that

purchasing goods directly from the farmer hence, avoid the intermediary.

7. Name of the Project: Rain Water Harvesting Project – Thantirimalya

Location: Thantirimalaya, Anuradhpuara District

Donor: The Ministry

Amount: Rs. 2,500,000.00

Description: 80 families from the area were selected and provided with rain water harvesting

tanks. This project is completed.

8. Name of the Project: School Rain Water Harvesting Project – Polonnaruwa

Location: All Divisional Secretariat’s of Polonnaruwa District

Donor: President Fund

Amount: Rs. 6,600,000.00

Description: 243 schools in Polonnaruwa District were provided with 8,000 liter Rain Water

Harvesting Tanks. The aim of the project was to create awareness among school children

about the importance of collecting rain water.

9. Proposals Submitted:

Paddy Vat Construction Project - Polonnaruwa

Eradication of Mal-nutrition among pregnant mothers and infants of Kataragama

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Rain Water Harvesting and Home Gardening Project – Hambantota

Tank Renovation Project – Anuradhapura and Kurunegala

Compost Preparation Project – Head Office

Farmer Products Collecting Center – Buttala

Plant Nursery Project – Mihintale

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Audit Report - 2006

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Annual Accounts – 2006

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Audit Reply

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No Title

2006

Audit Opinion Answer Sent Present Situation

2 Accounts

2.1 Audit Opinion Could not state an opinion

2.2 Comments on Financial Statements

2.2.1 Accounting Deficiencies

a. When comparing the Final

Balance of last year with

Opening Ledger balance of year

2006 Account No. 601 has a

difference of Rs. 20000 in

Photography & Cinema

Equipments

It is corrected in the year 2007

2.2.2 Receivable & Payable Balances

a. Unsettled advance balance of

Rs. 20,000 is being keeping in

accounts for 3-4 years

Due to the inability of finding the

relevant documents legal steps

could not be taken. Hence steps will

be taken to strike off this amount

from the accounts

Stroked off in the year 2009

b. Rs. 1,030,489 which was stated

as Accrued Expenses in the

accounts for 8-14 years (1992 –

1998) old total balance of Rs.

794,666 continued

According to Account reports this

amount of Rs. 794,669 is set aside

as income tax for the period 1992 –

1999. Further details cannot be

found. It is decided to deposit this

amount to the accumulated fund

since this is an amount set aside

from the income.

This accrued expenses were

deposited into the accumulated

fund with the approval of the

Board of Directors

c. Rs. 14,496 is being kept in the

Balance sheet for a long time as

a payable deposit

This balance was stricken off

from the account in the year

2008

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d. Rs. 23,400 is being kept in the

Balance sheet without

settlement for 2 years as

external creditors

From this Rs. 23,400 external

creditors Rs. 19,300 worth of

applicants were not appeared.

Information regarding this is not

available in the office. Rs. 5000

shown in the accounts since the

year 2003 is payable to the Service

Station, Narahenpita. The owner of

the Service Station has been

changed and the new owner does

not have further details. Hence it is

decided to deposit this Rs. 24,300

to the accumulated fund

e. Though all employees were

removed after paying

compensation on 31st

December 2002, Rs. 44,151 as

advances and loans are keeping

in the Loan Assets for 4 to 7

years

To recover the outstanding amount

it is decided to contact relevant

Grama Niladhari's through the

AGA .

Third reminder has been sent to

the related employees. No

answers were received. Hence

presented to the Board of

Directors to strike off this

amount

f. Rs. 774,762 balance amount of

debtors, suspicious of

recovering are being continued

in the accounts and Rs. 120,763

is being categorized as

uncertain debts

From the unrecoverable amount of

Rs. 774,762, Rs. 760,720 is from

the Government Institutes. It is

impossible to find the records and

files, hence agreed to further the

investigate and take a report

Indicated in the Audit Report of

2005 2.2 (a)

2.2.3. Lack of Evidence for Audit

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Documents on Rs. 3,862,016

worth of fixed assets (without

including vehicles) and updated

fixed asset register.

The opening expenses for

constructing a new building

valued at Rs. 486,124

Stock Verification Records on

Rs. 1,631,513 worth of stocks

were not produced before the

Audit

Descriptive Schedules or fixed

asset register is not being

maintained. Rs. 486,124 spent to

construct a new building has been

searched with the available

documents and found that it is

credited to the asset account. It was

agreed to find the possibility of

removing that amount from that

account

Steps have been taken to

revaluate the prevailing assets

and to prepare a new asset

register. In 2009 Rs. 481,184

were stroked off.

2.2.4. Non-compliance with Laws, Rules, Regulations and Management Decisions

a. Government logo is not shown

in the Board's vehicles

This defect should be corrected.

Since steps have been taken already

to change the name of the Board, it

is decided to name the vehicles of

the Board after finalizing it

b. Name of the Board is not shown

on the vehicles of the Board

This defect should be corrected.

Since steps have been taken already

to change the name of the Board, it

is decided to name the vehicles of

the Board after finalizing it

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c. 9 officers were employed on

contract basis against the

directives

This staff is recruited on contract

basis to fulfill special duties (Sales

Center - Dehiwela & Plant

Nursery). At present the Board is

engaged with the Management

Services Department regarding new

recruitments, it is decided that to

follow proper recruitment methods

after getting the approval.

d. Financial Regulations

1 380 - Not taken the Treasury

approval to maintain 5 Bank

Accounts

These banks Account were existed

at the time of closure of the Board

in 2002. Since the liquidation was

not complete those accounts have

been kept open. These accounts

may be started with the intention of

keeping accounts separately for

various projects

It has been decided to keep those

accounts in following manner.

1. Treasury funds and expenses

2. Projects done by the Ministry

of Agriculture

3. Self funded Projects Income

4. Self funded Projects Expenses

5. Rice Flour Factory -

Ambalantota

2 396 - Adequate steps have been

not taken on the out dated

cheque of Rs. 14,000

In the year 2007 this cheque was

cancelled and post in the relevant

accounts

3 756 - Stock Verification is not

done

In the year 2007 the stock

verification is correctly done

3 Finance and Operating Review

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3.1 Financial Results According to the financial

statements presented, the

operation of the Board for the

year ended 31st December

2006had resulted in a net deficit

of Rs.7,020,025 after taking

into account the Government

Grant as compared with the

corresponding net deficit for

Rs.3,355,278 for the preceding

year. The Government grant for

the year is Rs.7,728,200. Rs.

4,802,585 was received by the

Government last year.

3.2 Performance

a. According to the Action Plan of

the Board there were 16

activities and at the end of the

year only 5 activities were

finished

This was happened due to the non-

receiving of expected finances for

the planned activities.

b. Tank renovation project and

Utilizing Govi Sevana

Buildings Productively Projects

were planned during the year

but not started

This was happened due to the non-

receiving of expected finances for

the planned activities.

3.3 Inactive and Under Utilized expenses / Assets

a. According to the Annual

Financial Reports of 206 Rs.

629,866 worth of stocks were

inactive for more than 5 years

from the total stock of Rs.

1,631,512

This balance is continued in ledger

accounts and it is necessary to

balance the Accounts. Since they

are unusable it is decided to remove

them after presenting a Board Paper

Indicated n the Audit report

2005 as 2.2.4 (c)

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3.4 Identified Losses

Rs. 129,655 loss is reported in

the project Big Onion

Purchasing in the reviewed year

Farmers faced a severe problem of

selling their Big Onion yields due

to high production during the Yala

season. The Board has intervened

to protect the farmer and

purchasing was done. But due to

the prevailed market condition at

time and the perishable nature of

Big Onions leads to this loss. Steps

will be taken to avoid this type of

situations in the future and relevant

advices are given

3.5 Uneconomical Transactions

a. Rs. 134,271 has been spent for

paper advertisement regarding 2

projects without receiving funds

This expense was done after getting

the promise of providing finances

for this project by the related party.

But after publishing the

advertisement the promised fund

did not given and the action taken

was useless

b. Expenses incurred as Salary Rs.

215,233 & fuel allowance Rs.

114,708 on an Officer who did

not contributed to the

management or performance of

the Board was uneconomical.

In this statement the indicated

officer is the Vice Chairman. At the

beginning of the employment all

privileges were taken and due to

non-receiving any participation for

Board's activities all payments were

stopped. Hence the damage was

minimized

3.6 Cooperate Plan

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According the Cooperate Plan

2005 – 2009 only 2 activities

were started for the reviewed

year and the progress of them

were 33%. For 6 activities

funds were not received

adequately

The progress was at the minimum

level due to the inadequate amount

of staff and the delay of funds

received

3.7 Staff

No actions were taken to

prepare a staff recruiting

procedure and send it to the

Management Services

Department and approved

On 07.03.2006 a letter to recruit 20

staff has been issued by the

Management Services Department.

Further on 08.12.2006 another

letter was issued to recruit another

2 project officers. To get the

approval of recruiting procedure

actions are being taking.

Approval were received

3.8 Budget Control

a. An amount of Rs. 166,040 has

been spent in excess of the

amount allocated for the capital

expenditure

This expense has been incurred to

buy 3 computers simultaneously to

replace the very old computers used

at tie head office and also to buy a

refrigerator and an air conditioner

required for the shop at Dehiwela,

which was started in a small scale

and showed a steady progress. This

has not led to an over spending

where the total provision in the

budget is concerned.

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b. Since there was a considerable

fluctuation in the budgeted

expenditure and the actual

expenditure, it has been

observed that the budget has not

been used as a productive

control tool

Relevent officers were informed to

alter the budget and to get the

approval before doing this type of

purchases

4 Systems & Controls

a. Special attention should be paid

for the purchases

Steps have been taken to systemize

the purchasing procedure