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Stewardship

The Board’s Statement on Internal Control

Responsibility

As per Section D 1.3 of the Code of Best Practice on Corporate Governance – 2013, jointly issued by the Securities and Exchange Commission of Sri Lanka and The Institute of Chartered Accountants of Sri Lanka, the Board of Directors presents this Report on internal control mechanisms of Ceylinco Life Insurance Limited ('the Company').

The Board of Directors is responsible for the adequacy and effectiveness of the Company’s systems of internal controls and such, a system is designed to manage the Company’s key areas of risk within an acceptable risk profile, rather than eliminating the risk of failure to achieve the business objectives and policies of the Company. Accordingly, the system of internal controls can only be provided at a reasonable but not absolute assurance, against material misstatement of management and financial information and records or against financial losses or fraud.

Internal Control Processes

The key processes that have been applied in reviewing the design and effectiveness of the systems of internal controls include the following:

  • Internal Audit

Audits are carried out as per the annual audit plan, which is determined by the risk assessment and approved by the Audit Committee on all the branches and the head office departments, in order to provide an independent report on activities of these branches and departments. Accordingly, Internal Audit Department checks the compliance with instructions and procedures and effectiveness of the internal controls, that are implemented by the Company and highlight significant findings, in respect of any non-compliance and ineffectiveness of the internal controls.

  • Risk Management

The Board Risk Committee is established to assist the Board to oversee the overall management of principal areas of risk of the Company. The Board Risk Committee implements the risk management framework through Executive Risk Committees. Meetings are held monthly to discuss key risk areas and necessary actions are initiated. Risks that have been discussed in each Executive Committee level are discussed and escalated to the Board level accordingly. The Head of Internal Audit takes part in all discussions of Executive Risk Committees and its Sub-committees and an independent review is made to the Board and the Audit Committee directly, as to whether the decisions and the implementation process have been properly adhered to. Further, details of the activities undertaken by the Board and Executive Risk Committees of the Company, have been explained in the Risk Management.

  • Audit Committee

Internal control issues identified by the internal audit department and the External Auditors are submitted to the Audit Committee for their reviews. Those issues are reviewed by the Audit Committee and evaluate the corrective actions taken in order to strengthen the internal control environment of the Company.

The Audit Committee reviews the quality assurance and improvement programmes of the Internal Audit Department and the performance of the External Auditor, in order to evaluate the adequacy and effectiveness of the risk management and internal control system.

The minutes of the Audit Committee meetings and recommendations, with regard to the requirement of improvements, are tabled for the information of the Board

on a periodic basis. Further, details of the activities undertaken by the Audit Committee of the Company, have been explained in the Audit Committee Report.

Confirmation

Based on the above processes, the Board confirms that the financial system of the Company has been designed to provide a reasonable assurance regarding the reliability of financial reporting and the preparation of Financial Statements for various stakeholders have been done in accordance with Sri Lanka Accounting Standards, comply with the requirements of the Companies Act No. 07 of 2007 and the accounting records of the Company have been maintained in the manner required by the Regulation of Insurance Industry Act No. 43 of 2000.

By order of the Board,

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J A Setukavalar
Chairman – Audit Committee

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P A Jayawardena
Director/Chief Financial Officer

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R Renganathan
Managing Director/Chief Executive Officer

Colombo
17 February 2016