The Statement sets out the responsibility of the Board of Directors, in relation to the Financial Statements of the Commercial Bank of Ceylon PLC (the Bank) and the Consolidated Financial Statements of the Bank and its Subsidiaries (the Group).
The responsibilities of the External Auditors in relation to the Financial Statements are set out in the “Independent Auditors’ Report” given on pages 138 to 140.
In terms of Sections 150 (1), 151, 152 and 153 (1) and (2) of the Companies Act No. 07 of 2007 and amendments thereto, the Board of Directors of the Bank is responsible for ensuring that the Group and the Bank keep proper books of account of all the transactions and prepare Financial Statements that give a true and fair view of the financial position of the Group and the Bank as at the end of each financial year and of the financial performance of the Group and the Bank for each financial year and place them before a General Meeting. The Financial Statements comprise of the Statement of Financial Position as at December 31, 2020, the Income Statement and Statement of Profit or Loss and Other Comprehensive Income, Statement of Changes in Equity, Statement of Cash Flows for the year then ended and Notes thereto of the Group and the Bank.
Accordingly, the Board of Directors confirms that the Financial Statements of the Group and the Bank give a true and fair view of the:
- financial position of the Group and the Bank as at December 31, 2020; and
- financial performance of the Group and the Bank for the financial year then ended
The Board of Directors also wishes to confirm that:
- appropriate Accounting Policies have been selected and applied in preparing the Financial Statements exhibited on pages 143 to 290 based on the latest financial reporting framework on a consistent basis, while reasonable and prudent judgements have been made so that the form and substance of transactions are properly reflected and material departures, if any, have been disclosed and explained;
- the Financial Statements for the year ended December 31, 2020, prepared and presented in this Annual Report are in agreement with the underlying books of account and are in conformity with the requirements of the following:
- Sri Lanka Accounting Standards;
- Companies Act No. 07 of 2007 and amendments thereto (Companies Act);
- Sri Lanka Accounting and Auditing Standards Act No. 15 of 1995;
- Banking Act No. 30 of 1988 and amendments thereto;
- Listing Rules of the Colombo Stock Exchange (CSE); and
- Code of Best Practice on Corporate Governance issued by The Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka);
- these Financial Statements comply with the prescribed format issued by the CBSL for the preparation of annual Financial Statements of licensed commercial banks;
- proper accounting records which correctly record and explain the Group’s and the Bank’s transactions have been maintained as required by the Section 148 (1) of the Companies Act to determine at any point of time the Group’s and the Bank’s financial position, with reasonable accuracy, enabling preparation of the Financial Statements, in accordance with the Companies Act to facilitate proper audit of the Financial Statements;
- they have taken appropriate steps to ensure that the Group and the Bank maintain proper books of account and review the financial reporting system directly by them at their regular meetings and also through the BAC, the Report of the said Committee is given on pages 86 to 88. The Board of Directors also approves the Interim Financial Statements prior to their release, following a review and recommendation by the BAC;
- they accept responsibility for the integrity and objectivity of the Financial Statements presented in this Annual Report;
- they have taken reasonable measures to safeguard the assets of the Group and the Bank and to prevent and detect frauds and other irregularities. In this regard, the Board of Directors has instituted an effective and comprehensive system of internal controls comprising of internal checks, internal audit and financial and other controls required to carry on the business of banking in an orderly manner and safeguard its assets and secure as far as practicable, the accuracy and reliability of the records. The “Directors’ Statement on Internal Control over Financial Reporting” is given on pages 109 and 110;
- to the best of their knowledge, all taxes, duties and levies payable by the Bank and its subsidiaries, all contributions, levies and taxes payable on behalf of and in respect of the employees of the Bank and its subsidiaries, and all other known statutory dues as were due and payable by the Bank and its subsidiaries as at the reporting date have been paid or, where relevant, provided for, except as specified in Note 60 to the Financial Statements on “Litigation against the Bank” on pages 250 and 251.
- as required by the Section 56 (2) of the Companies Act, they have authorised distribution of the dividends paid and proposed upon being satisfied that the Bank and all its subsidiaries, subject to complying with all the conditions imposed by the Central Bank of Sri Lanka, would satisfy the solvency test after such distributions are made in accordance with the Section 57 of the Companies Act and have obtained in respect of dividends paid and proposed, and also for which approval is now sought, necessary certificates of solvency from the External Auditors;
- as required by the Sections 166 (1) and 167 (1) of the Companies Act, they have prepared this Annual Report in time and ensured that a copy thereof is sent to every shareholder of the Bank, who have expressed desire to receive a hard copy. Considering the prevailing situation in the Country, we have hosted a soft copy of this Annual Report in the Investor Relations section of the Bank’s website (https://www.combank.net/newweb/en/investors), in addition to the soft copy thereof available in the CSE website, for the benefit of other shareholders within the stipulated period of time as required by the Rule No. 7.5 (a) and (b) of Continuing Listing Requirements of the Listing Rules of the CSE, instead of sending a soft copy in a CD.
- that all shareholders in each category have been treated equitably in accordance with the original terms of issue;
- that the Bank and its quoted subsidiary have met all the requirements under the Section 07 of Continuing Listing Requirements of the Listing Rules of the CSE, where applicable;
- that after considering the financial position, operating conditions, regulatory and other factors and such matters required to be addressed in the “Code of Best Practice on Corporate Governance” issued by the CA Sri Lanka, the Board of Directors has a reasonable expectation that the Bank and its subsidiaries possess adequate resources to continue in operation for the foreseeable future. For this reason, we continue to adopt the going concern basis in preparing the Financial Statements;
- the Financial Statements of the Group and the Bank have been certified by the Bank’s Chief Financial Officer, the officer responsible for their preparation, as required by the Sections 150 (1) (b) and 152 (1) (b) of the Companies Act and also have been signed by three Directors and the Company Secretary of the Bank on February 24, 2021 as required by the Sections 150 (1) (c) and 152 (1) (c) of the Companies Act and other regulatory requirements; and
- the Bank’s External Auditors, Messrs Ernst & Young who were appointed in terms of the Section 158 of the Companies Act and in accordance with a resolution passed at the last Annual General Meeting held on June 25, 2020, were provided with every opportunity to undertake the inspections they considered appropriate. They carried out reviews and sample checks on the system of internal controls as they considered appropriate and necessary for expressing their opinion on the Financial Statements and maintaining accounting records. They have examined the Financial Statements made available to them by the Board of Directors of the Bank together with all the financial records, related data and minutes of shareholders’ and Directors’ meetings and expressed their opinion in the “Independent Auditors’ Report” which appears as reported by them on pages 138 to 140;
Accordingly, the Board of Directors is of the view that they have discharged their responsibilities as set out in this Statement.
By Order of the Board,
R A P Rajapaksha
February 24, 2021