The Central Bank has clarified that Ernst & Young Sri Lanka remains eligible to audit licensed banks, following restrictions placed on individual partners connected to the National Development Bank audit.
According to the Bank Supervision Department, the restriction applies to the engagement partner and the quality assurance partner on the NDB audit — not to the firm. EY “retains its recognition as a qualified auditor under the Banking Act,” the Central Bank said.
The clarification narrows what was reported on 10 November as a restriction on EY partners. The distinction matters commercially: a firm-level disqualification would have forced audit changes across EY’s licensed-bank clients, while a partner-level restriction does not.
What the restriction follows
The regulatory action stems from an internal fraud at National Development Bank. A forensic review conducted by Deloitte put the total at Rs. 13.64 billion, about Rs. 60 million above the interim findings NDB had disclosed earlier.
NDB disclosed the forensic findings to the stock exchange on 29 September. The matter was taken up by a parliamentary committee on 5 November, where it was confirmed that no customer accounts were affected. The committee identified gaps in transaction monitoring, daily reconciliation and internal audit processes.
Separately, the chair of the Sri Lanka Accounting and Auditing Standards Monitoring Board said the board’s inquiry findings were referred to the Attorney General on 15 October for a legal opinion.
Not reported
The filing does not name the two restricted partners, state how long the restriction runs, or say whether it can be lifted. It does not indicate whether EY will be required to rotate the NDB engagement, nor what the Attorney General’s opinion is expected to address or when it is due. No individual Central Bank official is quoted — the statements are attributed to the institution and to the Bank Supervision Department. Daily Mirror’s account carries no reporter byline.
Update: a second newsroom, and the Central Bank’s own wording
Correction to the sourcing note below. This article originally stated that no second verified newsroom was carrying the clarification. That is no longer accurate: EconomyNext published its own account at 11.23 a.m. on 11 November, under the byline of Nirmalie Alahakone, and has been added to the sources above.
EconomyNext reproduces the Central Bank statement in full, under the heading “Clarification on the Auditors to Audit the Accounts of Licensed Banks in Sri Lanka.” Its wording confirms the scope precisely: the CBSL “requested M/s Ernst & Young, Sri Lanka (E&Y) not to assign any audit engagements of Licensed Banks to the Engagement Partner and the Quality Assurance Partner involved in the audit of NDB’s financial statements.”
The statement adds, “For the avoidance of doubt, this restriction does not affect the recognition of E&Y as a qualified auditor eligible to audit the accounts of Licensed Banks in Sri Lanka under the provisions of the Banking Act, No. 30 of 1988, as amended.”
EconomyNext describes the underlying NDB loss as a 13.6 billion rupee internal financial fraud, consistent with the Rs. 13.64 billion forensic figure reported above. The two filings agree on substance; EconomyNext’s value is that it carries the regulator’s own text rather than a summary of it.
