Sri Lanka's educational system has negatively been impacted by the COVID-19 pandemic. Especially, drastic changes in the regular pattern of learning and evaluation have serious impacts on undergraduates and lecturers in Sri Lankan universities. The aim of this study is to explore the state university undergraduates' and the test administrators' perceptions of online examinations, thereby understanding the challenges and issues of online assessments. To this end, a qualitative investigation was undertaken with forty undergraduates of four government universities and seven lecturers of two universities in Sri Lanka. The study used questionnaires to gather data from the undergraduates and interviews with lecturers. Thematic analysis was used for data analysis. Ninety percent of the undergraduates and university lecturers reported that online evaluation has become ineffective due to their lack of expertise in the learning management systems and inadequate knowledge of using digitized internet-assisted platforms. Moreover, undergraduates' economical, technical and personal issues have also hindered the effectiveness of online evaluation. Since the online examinations could not evaluate undergraduates' learning outcomes accurately as onsite examinations, the results of online examinations cannot be considered valid and reliable. The current study has implications for the university undergraduates, test administrators, and university management.