Annual Report 2012 - National Savings Bank

197THE RESULTS OF A CHALLENGING YEARDIRECTORS’ STATEMENT ON INTERNAL CONTROLSThis report has been issued in line withthe Banking Act Direction No. 11 of2007, Section 3 (8) (11) (b), and preparedbased on the guidelines issued by TheInstitute of Chartered Accountants ofSri Lanka.The Board of Directors is responsiblefor ensuring that an adequate andeffective system of internal controlis established and maintained in theNational Savings Bank. However,such a system is designed to managethe Bank’s signicant risk areas withinacceptable risk parameters, ratherthan eliminating the risk of failure toachieve business objectives of the Bank.Accordingly, the system of internalcontrols can only provide reasonablebut not absolute assurance againstmaterial misstatement of managementand nancial information and recordsor against nancial losses or frauds.The Board of Directors has establishedan ongoing process for identifying,evaluating and managing the signicantrisks faced by the Bank and this processincludes enhancing the system ofinternal controls as and when there arechanges to the business environmentor regulatory requirements and otherguidelines. The process is regularlyreviewed by the Board and conrmthe compliance with the Guidance forDirectors issued by The Institute ofChartered Accountants of Sri Lankaon the Directors Statement on InternalControls of this Annual Report. TheBoard has assessed the internal controlsystem taking into principles for theassessment of internal control system asgiven in that guidance.The Board of Directors is of the viewthat the system of internal controls inplace is sound and adequate to providereasonable assurance regarding thereliability of Financial Reporting,and the preparation of FinancialStatements for external purposes and isin accordance with relevant accountingprinciples and regulatory requirements.The management assists the Boardin the implementation of the Board’spolicies and procedures on risk andcontrol by identifying and assessingthe risks faced by the Bank, and in thedesign, operation and monitoring ofsuitable internal controls to mitigateand control these risks.The Board has put in place thesystem of reviewing the design andthe effectiveness of system of internalcontrol periodically. The key processes,among other things include thefollowing: The Board Sub-Committees havebeen established with dened scopesand functions to assist the Board inensuring the effectiveness of theBank’s operations and that theBank’s operations are in accordancewith the corporate objectives,strategies, and policies and businessdirections that have been approved. The Board Audit Committee (BAC)reviews periodically the internalcontrol issues identied by theInternal Audit Division of the Bank,the External Auditors, RegulatoryAuthorities and corrective actionstaken to rectify the decienciesNATIONAL SAVINGS BANK . ANNUAL REPORT 2012