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Pan Asia Bank 2009 Annual Report

Pan Asia Bank 2009 Annual Report

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Composition of the Audit Committee

In accordance with the currently accepted best practice and Banking
Act Direction No. 11 of 2007, on Corporate Governance guidelines, the
Board appointed Audit Committee comprises of the following three

Independent Non Executive Directors.

l Mr. M.D.S. Goonatilleke(Chairman)
l Mr. A.A. Page
l Mr. R.E.U. De Silva

The Chairman of the Audit committee, an Independent Non Executive

Director, is an Associate member of the Institute of Chartered

Management Accountants (UK) and a passed fnalist of the Institute
of Chartered Accountants, (SL) with over 25 years of post qualifying
experience.

Mr. R.E.U. De Silva was appointed as a member of the Committee during
the year subsequent to, Mrs. H.V. Amaraseka’s resignation on 25th

November, 2009. I wish to take this opportunity to place on record

the Committee’s appreciation for the services rendered by Mrs. H.V.

Amarasekara as a member of the Audit Committee.

Role of the Committee

The Charter of the Audit Committee clearly defnes the role and

responsibility of the Audit Committee and charter is periodically
reviewed and revised by the Board of Directors.

The main objective of the Audit Committee is to assist the Board of
Directors in fulflling its oversight responsibilities in fnancial reporting,
internal controls and risk management. The Committee is empowered to:

l Monitor the integrity of the Financial Statements and reviewing of
signifcant fnancial reporting judgments contained in them to be in
compliance with Sri Lanka Accounting Standards;

l Review the internal fnancial controls and internal control and risk
management systems;

l Review bank’s compliance with legal and regulatory requirements.

l Monitor and review the effectiveness of the internal audit function;

l Make recommendations to the Board in relation to the appointment
of the external auditor and to approve the remuneration and terms
of engagement of the external auditor;

l Review and monitor the external auditors’ independence and
objectivity and the effectiveness of the audit process.

l Ensure the Bank policies are frmly committed to the highest

standards of good Corporate Governance Practices and operations

confrm to the highest ethical standards, in the best interest of all

stakeholders.

Meetings

The committee held 14 meetings (including one special meeting) during

the period under review. Head of Audit Department functions as the
secretary to the Committee. Consultant to Board of Directors, Chief

Executive Offcer, Chief Financial Offcer and Chief Information Offcer
attends the meetings by invitation. Members of the Senior Management

of the Bank were invited to participate at meetings as and when

required. The proceedings of the Audit Committee meetings are regularly

reported to the Board of Directors.

Activities

The committee carried out the following activities.

Financial Statements

The committee reviewed the effectiveness of the fnancial reporting

system in place to ensure that information provided to the stakeholders
is reliable and is in strict adherence and compliance to the requirement

of the Sri Lanka Accounting Standards and disclosure requirements. The
Committee reviewed the quarterly and annual Financial Statements of

the Bank prior to the approval of the Board.

Regulatory Compliances

The Bank’s procedure in place to ensure compliance with mandatory

banking and other regulatory requirements were under close scrutiny.

Internal Audit

During the year under review, the Committee reviewed the audit reports

presented by the Internal Audit Department together with Management
responses. The Committee regularly reviewed and monitored the internal

audit function and performances of the Internal Audit Department.

Updated Internal Audit Manual was approved by the committee, which

greatly focuses on adequacy of internal controls and risk management.

External Audit

The Committee met with M/s Ernst & Young prior to commencement of

the Annual Audit to discuss the audit scope, approach and methodology

to be adopted. The Management Letter of the External Auditors and

the responses of the management thereto were discussed at the

Audit Committee. The meetings were held without the presence of the

management and auditors have assured that they have no cause to
compromise their independence

45

Pan Asia Bank Annual Report 2009

The Audit Committee having evaluated independence and performance
of the External Auditors has recommended to the Board of Directors
that M/s Ernst & Young, Chartered Accountants, be reappointed as
the auditors of the Bank for the fnancial year ending 31st December
2010, subject to the approval of the Shareholders at the Annual General
Meeting.

Conclusion

The Board Audit Committee is of the view that adequate internal

controls and procedures are in place at the Bank to provide reasonable

assurance that its assets are safeguarded to ensure that the fnancial
position and the results disclosed in the Audited Financial Statements

are free from any material misstatements.

M.D.S. Goonatileke

Chairman

Board Audit Committee

Colombo

February 08, 2010

Growing. Strengthening. Transforming

46

The Board Integrated Risk Management committee is headed by the

Chairman of the Board of Directors and consists of two independent

Directors. The Consultant to the Board, The Chief Executive Offcer,
Chief Financial Offcer, Chief Risk Offcer, Deputy General Manager
(Legal & Recoveries), Head of Internal Audit and Chief Dealer attends
meetings by invitation. The committee held seven meetings during the

year under review and its proceedings were reported to the Board of
Directors.

The Board Integrated Risk Management Committee assists the Bank’s
Board in fulflling their oversight responsibilities with respect to the
existence, operation and effectiveness of the Risk Management

Conditions, Programmes, Policies, and Practices employed by the Bank
to manage various types of risks, which include the compliance with all
regulatory and statutory requirements.

l Reviewing and oversight of the risk profle and portfolio

composition of the Bank.

l Making recommendations to the Board on Risk Management

concerns of the committee.

l Reviewing existing policies and procedures for mitigation of risks

faced by various business units of the Bank.

l Oversight and development of Risk Management policies,

procedures and techniques encompassing all products and services.
l Oversight of implementation and review of risk management and
internal control system of the Bank.

During the course of the year the committee, with the approval of the
Board of Directors, adopted an updated charter, which will enable it to
meet the above responsibilities and regulatory requirements effectively.

Monetary Authority continued to supervise and direct us concerning
prudent Corporate Governance. We have complied with all of their

Directives and Guidlines specially the recent directives regarding

Integrated Risk Management and risks relating to foreign exchange

business.

A.G. Weerasinghe

Chairman

Board Integrated Risk Management Committee

Colombo

February 08, 2010

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