Audit Committee Report

Committee composition during 2022

  • Mr A C Manilka Fernando
    Non-Executive Director
  • Mr G Harsha Wijayawardhana*
    Non-Executive Director
  • Mr R M Priyantha Rathnayake
    Member/Non-Executive Ex officio Director
  • Major General (Retd.) G A Chandrasiri vsv
    Non-Executive Director

*Ceased to be a Director w.e.f 13 January 2023

Regular participants

  • Chief Internal Auditor
  • Chief Risk Officer
  • Assistant General Manager (Operational Audit)
  • Assistant General Manager
    (Credit Audit)
  • Assistant General Manager (Investigations)
  • Assistant General Manager (Information Systems Audit)
  • Internal Auditor
  • Representative of the Auditor General (the External Auditor of the Bank)

Secretary to the Committee

The Secretary, Bank of Ceylon/ Secretary to the Board who is an Attorney-at-Law and a Deputy General Manager, functions as the Secretary to the Committee.

Attend upon invitation

  • General Manager
  • Chief Financial Officer
  • Deputy General Manager (Finance and Planning)
  • Deputy General Manager (Compliance)
  • Any other member of Corporate or Executive Management/Any other Staff Member

Meetings held in 2022: 09

(Attendance given in the section on Corporate Governance of this Report)

Quorum: Two members or majority of the members whichever is higher.

Role of Committee

Audit Committee Charter

The Terms of Reference of the Audit Committee are governed by the Audit Committee Charter, approved and adopted by the Board.

The Committee also ensures that the scope and coverage of its functions addresses the requirements of the Banking Act Direction No. 11 of 2007 on “Corporate Governance for Licensed Commercial Banks in Sri Lanka” and its subsequent amendments issued by the Central Bank of Sri Lanka.

Principal Focus

The Audit Committee primarily focuses on assisting the Board in fulfilling its duties by providing an independent and objective review of the Bank’s financial reporting process.

Medium of Reporting

The proceedings of the Audit Committee meetings are tabled and ratified at the Board meetings, where all key issues, concerns, actions taken, outcomes achieved or pending, and follow-up initiated, are clarified, discussed and Board approval obtained thereof.

Areas of Focus and Activities in 2022

Financial Reporting

  • Reviewed the monthly, quarterly and annual unaudited/audited Financial Statements to ensure that they are prepared and published in accordance with the requirements prescribed by the supervisory and regulatory authorities and applicable Accounting Standards.
  • Reviewed the liquidity management, capital adequacy and foreign currency management.

Regulatory Compliance

  • Reviewed compliance with mandatory banking and other statutory requirements.
  • Reviewed the progress of action taken in relation to the findings of the statutory examinations carried out by regulators.

Internal Controls

  • Reviewed the adequacy and effectiveness of the internal control mechanism of the Bank in line with Section 3(8) (ii) (b) of the Banking Act Direction No.11 of 2007 through the Internal Control Matrix.
  • On a regular basis and when specific events or cases warranted, conducted root cause analysis and made improvements to the systems, procedures and internal controls.

Internal Audit

  • Reviewed the independence, objectivity, and performance of the internal audit function.
  • Reviewed and amended the Internal Audit Department organisation structure with a view to achieving the objective of Internal Audit Charter and matching the structure to the present context. Accordingly, recommended to recruit new professional staff.
  • Evaluated the quality of the credit portfolio of the Bank and recommended necessary initiatives to improve the credit quality.
  • Approved the Internal Audit Plan and reviewed the effectiveness of the implementation of the Plan throughout the year.
  • Monitored the progress of the initiatives taken by the Internal Audit Department to improve Internal Control Monitoring Process.
  • Monitored the compliance with the Banking Act Direction No. 11 of 2007 on Corporate Governance issued by Central Bank of Sri Lanka on Internal Audit Charter and Audit Committee Charter.
  • Monitored the progress of the Internal Audit function of the subsidiaries.
  • Special Reviews were done on Expected Credit Loss Models, Cyber Security, Loans granted on Donor Agency Funding.

External Audit

  • The external audit of the Bank is carried out by the Auditor General in terms of the Constitution of the country. The Committee ensured that the external audit is carried out effectively and independently and maintained a continuous rapport with the representatives of the Auditor General in relation to the audit approach and procedure.
  • Conducted close door meetings with external auditors.

Way Forward

The Audit Committee will foster a positive and effective internal control environment by committing to achieve the objectives set out in the Audit Committee Charter during 2023 and beyond.

On behalf of the Audit Committee.

A C Manilka Fernando
Audit Committee

24 February 2023