Annual Report 2010-2011 - Colombo Stock Exchange

Report of the Audit Committee
The Audit Committee Charter, approved by the Board of
Directors defines the purpose, authority, composition, meeting,
and responsibilities of the Committee.
The purpose of the Audit Committee is to:
1. Assist the Board of Directors in fulfilling its overall
responsibilities for the financial reporting process
2. Review the system of internal control and risk management
3. Monitor the effectiveness of the internal audit function
4. Review the Company’s process for monitoring compliance
with laws and regulations.
5. Review the independence and performance of the external
auditors
6. To make recommendations to the board on the
appointment of external auditors and recommend their
remuneration and terms of engagement
The Audit Committee consisted of two independent and Non
Executive Directors, namely Prof. Lakshman R. Watawala and
Prof. Susantha Pathirana. The Chairman of the Committee
is a Senior Chartered Accountant. The Company Secretary
functions as Secretary to the Audit Committee.
The principal activities of the Committee are detailed below.
Meetings
The Audit Committee held eight meetings during the year under
review.
The Group Chief Financial Officer, Group Internal Audit
Manager and functional heads of the Strategic Business Units
(SBUs) were invited if deemed necessary for audit committee
meetings.
Meetings were held with the external auditors regarding the
scope and the conduct of the annual audits.
Internal Audit and Risk Management
The Internal Audit Programme was reviewed by the Committee
to ensure that it covered the major business units of the Group.
The Chief Internal Auditor was invited to be present at all Audit
Committee deliberations. He presented a summary of the
salient findings of all internal audits and investigations carried
out by his department for the period. The responses from the
Managing Directors of the SBUs to the internal audit findings
were reviewed and where necessary corrective action was
recommended and implementation monitored.
The Committee also had the responsibility to review the loss
making SBU’s of the Group and strategies for turning round
these Companies and recommending suitable corrective action.
Internal Controls
During its meetings, the Committee reviewed the adequacy
and effectiveness of the internal control systems and the
Group’s approach to its exposure to the business and financial
risks. Processes are in place to safeguard the assets of the
organisation and to ensure that the financial reporting system
can be relied upon in the preparation and presentation of
financial statements. A comprehensive Management Report
and Accounts are produced at month end highlighting all key
performance criteria pertaining to the Company’s SBUs which
is reviewed by the Senior Management on a monthly basis.
SBU Boards review performance on a quarterly basis.
Financial Statements
The Committee reviewed the Group’s Quarterly Financial
Statements, the Annual Report and Accounts for reliability,
consistency and compliance with the Sri Lanka Accounting
Standards and other statutory requirements, including the
Companies Act, No 7 of 2007, prior to issuance. It also reviewed
the adequacy of disclosure in published financial statements.
External Auditors
The Audit Committee has reviewed the other services
provided by the External Auditors to the group to ensure their
independence as Auditors has not been compromised.
The Committee reviewed the Management Letters issued by
the External Auditors, the Management response thereto and
also attended to matters specifically addressed to them. The
external auditors kept the audit committee informed on an
ongoing basis of all matters of significance. The committee met
with the auditors and discussed issues arising from the audit
and corrective action taken where necessary.
The Audit Committee has recommended to the Board of
Directors that Messrs Ernst & Young be re-appointed as
Auditors for the financial year ending 31st March, 2012 subject
to the approval of the shareholders at the next Annual General
Meeting.
Conclusion
The Audit Committee is satisfied that the control environment
prevailing in the organisation provides reasonable assurance
regarding the reliability of the financial reporting of the Group,
the assets are safeguarded and that the Listing Rules of the
Colombo Stock Exchange have been met.
Prof. Lakshman R Watawala
Chairman
27th May 2011
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Annual Report 2010/2011 | Richard Pieris and Company PLC