COMPOSITION AND MEETINGS

The Committee comprised of the following members during the year 2024 and as at the date of this report.

The Chairperson of the Committee, Ms Averil Ludowyke who counts over 39 years’ experience in auditing, accounting and finance is a Fellow of the Institute of Chartered Accountants of Sri Lanka and a Fellow of the Chartered Institute of Management Accountants, UK.

The Company Secretary acts as the Secretary to the Committee. The Senior Executive Director/CFO, DGM - Internal Audit, Senior AGM - Information Systems Audit and External Audit Partners attend meetings by invitation.

PURPOSE OF THE COMMITTEE

The Board Audit Committee is a Sub- Committee of the Board of Directors of the Company and reports directly to the Board. It holds oversight responsibility for the Company’s’ financial reporting system, compliance with legal and regulatory requirements, internal control mechanism, risk management process, internal audit function and review of independence and performance of external auditors, with a view to safeguarding the interests of the shareholders and all other stakeholders.

TERMS OF REFERENCE

The Committee is governed by the Terms of Reference (Charter) which has been prepared in line with the Rules set out in the Code of Best Practice on Corporate Governance issued by CA Sri Lanka. It provides an outline of the objectives, composition, role and responsibilities of the Committee.

Key responsibilities

▶ Assist the Board of Directors in fulfilling its overall responsibilities towards monitoring and reviewing the adequacy and effectiveness of accounting policies, financial and other internal control systems, f inancial reporting processes and risk management procedures.

▶ Review the Company’s processes for monitoring compliance with financial reporting requirements, information requirements pertaining to the Companies Act, Insurance Regulatory Commission of Sri Lanka, Securities and Exchange Commission of Sri Lanka, Colombo Stock Exchange and other relevant laws and regulations.

▶ Exercise independent oversight of the Company’s assurance functions, including external and internal audit and ensure the independence and effectiveness of both the external and internal audit functions.

▶ Make recommendations to the Board on the appointment or removal of external auditors, their remuneration and terms of engagement.

▶ Assessing the Company’s ability to continue as a going concern in the foreseeable future.

ACTIVITIES AND RESPONSIBILITIES DISCHARGED BY THE COMMITTEE DURING THE YEAR

Financial Reporting

▶ Reviewed and recommended the Company’s quarterly and annual f inancial statements to the Board for approval, prior to release, including the extent of compliance with Sri Lanka Accounting Standards (LKASs and SLFRSs) and the adequacy of disclosures required by other applicable laws, rules and guidelines.

▶ Reviewed significant potential accounting policy changes, including complex or unusual transactions, highly judgmental areas and recent professional and regulatory pronouncements, and their impact on the financial statements.

▶ Verified that appropriate accounting policies and practices and adequate internal controls and procedures are in place to provide reasonable assurance that the financial reporting system is effective and well managed in order to enable the preparation of f inancial statements in accordance with Sri Lanka Accounting Standards.

▶ Obtained and reviewed assurance by the CEO and CFO that the financial records have been properly maintained and the financial statements give a true and fair view of the Entity’s operations and finances; and by the CEO and other key management personnel who are responsible, regarding the adequacy and effectiveness of the Entity’s risk management and internal control systems.

▶ Reviewed the Quarterly Regulatory Compliance Reports submitted to the Committee and verified that the Company’s compliance framework provided reasonable assurance that all relevant laws, regulations, code of ethics and standards of governance have been adhered to.

▶ Reviewed the findings of examinations by regulatory agencies and auditor observations, especially in areas/ functions concerning Investment Division, Audit on Money Laundering and Terrorist Financing Risk Management, Audit on Reinsurance, Audit on Underwriting, among others.

Internal Audit

▶ Reviewed and approved the annual Audit Plan.

▶ Reviewed the scope of the internal audit, its budget, resource plan, activities and organizational structure of the internal audit function with the Chief Audit Managers.

▶ Reviewed the independence, objectivity and performance of the internal audit function and their evaluation of the internal control system.

▶ Reviewed the internal audit reports, nature of significant findings and their recommendations, management response and the status of the implementation of rectification measures on a regular basis.

Reviewed the controls and procedures in place to provide reasonable assurance that the company’s assets and information are safeguarded and policies, controls and procedures are in place to prevent the unauthorized leakage of information.

RISK MANAGEMENT AND CONTROLS

▶ Reviewed the processes for identification, evaluation and management of operational risks faced by the Company. The Committee was satisfied that an effective system of internal controls is in place to provide reasonable assurance on safeguarding the Company’s assets and reliability of Financial Statements.

▶Reviewed the processes to ensure that internal controls and risk management are adequate to meet the requirements of the Sri Lanka Auditing Standards.

External Audit

▶ Reviewed the independence and objectivity of the Independent External Auditors. The Committee was satisfied that the independence of the External Auditors has not been adversely influenced by any event or service that could result in a conflict of interest.

▶ Reviewed the external auditors’ proposed audit scope and approach, including coordination of audit effort with the internal audit. Discussions concerning the audit plan, key audit issues arising from the interim and f inal audits and their resolutions, Management Letter and management responses, proposed remuneration of the Auditor were carried out.

▶ Reviewed the non-audit services provided by the External Auditors against the policy, to ensure such functions do not fall within the restricted services and provision of such services would not impair the External Auditors’ independence and objectivity.

▶ The Committee recommended Messrs. Ernst & Young, Chartered Accountants to be re-appointed as the independent External Auditors subject to the approval of the shareholders at the Annual General Meeting scheduled to be held on 27th March 2025.

WHISTLEBLOWING POLICY

In accordance with the Whistleblowing Policy, all incidents which are reported are forwarded to an independent Committee which assesses and investigates matters reported through the whistle-blowing channel and which comprises of all Executive Directors. If in the event any incident which is reported is deemed to contain any potential or existing wrongdoing, the matter will be further investigated whilst ensuring the anonymity and confidentiality of the whistleblower..

DISCLOSURES

The Audit Committee has received assurance from the Chief Executive Officer and the Chief Financial Officer that the financial records have been properly maintained and the financial statements give a true and fair view of the Entity’s operations and finances and the Chief Executive Officer’s and Chief Financial Officer’s Statement is published in page 263 of the Annual Report.

The Committee is of the opinion that the Company is compliant with the f inancial reporting requirements and information requirements under the Sri Lanka Accounting Standards (LKASs and SLFRSs), the Rules of the Colombo Stock Exchange on Corporate Governance (as mandated by the Insurance Regulatory Commission of Sri Lanka), the Companies Act and other relevant financial reporting related regulations and requirements.

The Committee has obtained written assurance from the external auditors confirming that they are and have been independent throughout the conduct of the audit engagement in accordance with the terms of all relevant professional and regulatory requirements;

The Committee has further made a determination of the independence of external auditors by considering the period of engagement of the external auditor and the audit partner and the non-audit services provided by them and their affiliated parties.

COMMITTEE EVALUATION

The Audit Committee is satisfied that the effectiveness of the Company’s accounting policies and operational controls provide reasonable assurance that the affairs of the Company are managed in accordance with the Company policies and that the Company’s assets are properly accounted for and sufficiently safeguarded. The annual evaluation of the committee was carried out and it was deemed that the Committee’s functions were carried out effectively.

Ms A A Ludowyke

Chairperson – Board Audit Committee

20th February 2025