Board audit committee report

Board Audit Committee (“Audit Committee” or “the Committee”) of the Company presents its report for the year ended 31 March 2020. This Report was approved by the Board of Directors.

Objective and terms of reference

The objective of the Board Audit Committee is to assist the Board of Directors in its general oversight on financial reporting, system of internal control, functions relating to internal and external audit and process of monitoring compliance with legal and regulatory requirements. The Committee is responsible to the Board of Directors and reports on its activities regularly.

The Terms of Reference of the Committee are clearly defined in the Charter of the Audit Committee. In order to adequately address new developments to the Committee’s functions and concerns, the Audit Committee reviewed the Board Audit Committee Charter at its meeting held in July 2019 and revised it with approval of the Board of Directors during the same month.

Authority

The Board Audit Committee is appointed by the Board of Directors of People’s Leasing & Finance PLC. The Board of Directors of the Company was reconstituted on 19 February 2020 following which the Board Audit Committee was also reconstituted.

As at the end of the financial year 31 March 2020, the Board Audit Committee comprised of the following Non-Executive Directors of the Company.

Ms Miriam Coralie Pietersz – Chairperson of the Committee Independent Non-Executive Director Appointed to the Board w.e.f. 1 March 2020	Chairperson of the Committee is an Associate Member of the Institute of Chartered Accountants in England and Wales and a Fellow Member of The Institute of Chartered Accountants of Sri Lanka. She has over 25 years’ experience at senior level in auditing, finance, accounting in several industries in both private and public sectors. She is also a Member of the Council of The Institute of Chartered Accountants of Sri Lanka and has served on many committees of the Institute.
Mr U L Asoka W Bandara – Member Independent Non-Executive Director Appointed to the Board w.e.f. 19 February 2020	Mr Asoka Bandara has over 30 years of expertise in demand generation function and business development in MNC’s and leading local corporates. Currently he operates management consultancy services for leading conglomerates. He holds a MBA from University of Colombo and a Postgraduate Diploma in Marketing (CIM-UK).
Mr Azzam A Ahamat – Member Non-Independent Non-Executive Director Appointed to the Board w.e.f. 30 December 2019	Mr Azzam Ahamat, is a Fellow Member of the Chartered Institute of Management Accountants (UK), a Fellow Member of the Association of Chartered Certified Accountants (UK) and a Fellow Member of the Institute of Certified Management Accountants of Sri Lanka. He has over 18 years of experience both locally and internationally across strategic financial management, alternate investments and risk management.

Mr Udesh Gunawardena, Head of the Internal Audit, functions as the Secretary to Board Audit Committee.

Prior to the reconstitution, the Board Audit Committee comprised of the following Non-Executive Directors of the Company.

Mr Jehan P Amaratunga –
Committee Chairman (Ceased to hold office w.e.f. 30 December 2019)

Mr M Pradeep Amirthanayagam
(Ceased to hold office w.e.f. 19 February 2020)

Mr M A M. Rizwan
(Ceased to hold office w.e.f. 30 December 2019)

Meetings

The Committee is required to meet at least four times per financial year, preferably quarterly, with authority to convene additional meetings as circumstances require. The Committee held four meetings during the financial year under review. The attendance of the Committee Members at the meetings was as follows;

Name of the member	Attendance at Committee Meetings
Mr Jehan P Amaratunga	4/4
Mr Michael Pradeep Amirthanayagam	3/4
Mr Mohamed Anise Mohamed Rizwan	4/4

The Chief Executive Officer and other members of the senior management/staff of the Company attend the meetings by invitation.

The proceedings of the Audit Committee Meetings are recorded with adequate details and reported to the Board of Directors.

Details of the activities during the financial year

Financial reporting

The Committee assisted the Board of Directors in discharging its responsibility for the preparation of the quarterly and annual Financial Statements to reflect a true and fair view of the affairs of the Company in accordance with the Company’s accounting records and in conformity with the Sri Lanka Accounting Standards, the Sri Lanka Financial Reporting Standards, Finance Business Act No. 42 of 2011, the Companies Act No. 07 of 2007, rules and regulations of the Colombo Stock Exchange and the Securities and Exchange Commission of Sri Lanka and Central Bank of Sri Lanka Directions.

The Committee reviewed the Company’s interim and annual Financial Statements prior to the submission of the same to the Board. The Audit Committee also reviewed the profit reconciliation based on CBSL directions and LKAS/SLFRS and the impact of dividend declarations to the prudential ratios, in compliance with relevant regulations.

Further, the Committee reviewed and approved the statement to be included in the Annual Report on Internal Control over financial reporting.

Internal audit

A dedicated Internal Audit Department is available to carry out the internal audit function and to report to the Audit Committee. During the financial year, the Audit Committee reviewed and updated the internal audit manual in order to improve the effectiveness and objectivity of the internal audit process. Further, the Committee reviewed and approved the Internal Audit plan and the strategy for the financial year and ensured the implementation of internal audit recommendations.

External audit

The Auditor General had informed the Company that, according to the National Audit Act No. 19 of 2018, the Auditor General shall carry out the audit by himself or any person authorised by the Auditor General. Accordingly, Messrs Ernst & Young was appointed to assist the Auditor General in performing the external audit.

The Committee also reviewed the External Auditor’s Management Letter pertaining to the previous year’s audit and management responses thereto. The Committee initiated action to ensure that recommendations contained in the Management Letter were implemented by the Management.

Ethics and good governance

The Committee promotes good governance among the internal audit staff by introducing an internal audit policy charter and among all staff by introducing a whistleblower protection policy.

Highest standards of corporate governance and adherence to the Company’s Code of Ethics are ensured. All appropriate procedures are in place to conduct independent investigations into incidents reported through whistle-blowing or identified through other means.

Whistleblowing and fraud

The Company’s whistleblower protection policy intends serving a wide-spread informal channel for the corporate fraud risk management. The policy has been published in the Company intranet and guarantees the maintenance of strict confidentiality of the whistleblowers.

Any employee, who observes or notices any improper or illegal activity or unethical practices in the Company or receives credible information of the same is encouraged to practice whistle-blowing. Awareness is being raised among staff to encourage its use to raise any genuine concerns.

 

Coralie Pietersz
Independent Director/Chairperson
Board Audit Committee

8 July 2020

Colombo