Business · Sri Lanka Bureau
Central Bank bars NDB audit team from fresh assignments amid fraud probe
Sri Lanka's Central Bank has restricted Ernst & Young from assigning audit staff involved in the National Development Bank examination to new projects as investigations continue into a Rs 13.6 billion fraud discovery at the lender.
LSN Sri Lanka ·
The Central Bank of Sri Lanka (CBSL) has instructed M/s Ernst & Young, Sri Lanka to prevent personnel engaged in the National Development Bank PLC audit from undertaking fresh assignments while the financial institution remains under scrutiny for alleged internal fraud.
The directive follows the disclosure of fraudulent activity totalling Rs 13.6 billion at NDB, one of the country's largest development finance institutions. The bank has initiated a formal investigation into the matter, with regulatory authorities implementing interim control measures.
The CBSL's decision to restrict reassignments of the audit team reflects concerns about potential conflicts of interest and the need to preserve the integrity of the ongoing investigation. The move is intended to ensure that individuals with knowledge of the audit process remain available for regulatory inquiries and do not face divided loyalties through concurrent assignments.
NDB, a state-owned development finance institution, plays a significant role in funding large-scale infrastructure and industrial projects across Sri Lanka. The fraud discovery represents a serious breach of internal controls and has prompted heightened regulatory oversight of the bank's operations and governance structures.
The Central Bank has indicated that it will monitor compliance with the directive and continues to assess the adequacy of NDB's internal audit functions and risk management frameworks.