Forensic audit on NDB internal fraud to an international institution

It has now been confirmed that a massive internal financial fraud amounting to LKR 13.2 billion has occurred within the National Development Bank (NDB), and several officers involved have been arrested by the police, with investigations currently underway. In light of this serious situation, the Central Bank has announced that the relevant bank is currently finalizing arrangements to conduct a full forensic audit by a leading international institution comprising foreign experts, under the direct instructions of the Central Bank of Sri Lanka.

The Central Bank states that it is closely monitoring this entire process daily and emphasizes that the anticipated forensic audit will cover not only matters directly related to the fraud but also several other areas. Accordingly, a full assessment will also be conducted to determine if there has been any deviation from the bank's internal control mechanisms, supervisory activities, and regulatory requirements related to good governance policies during the period when the fraudulent transactions occurred.

All progress reports, interim findings, and the final audit report of this audit process, which is to be implemented expeditiously, are to be submitted directly to the Central Bank of Sri Lanka. Furthermore, the Central Bank expects to directly engage with the auditors as required during the audit process. Concurrently, the Central Bank has also issued strict instructions to the relevant bank management to take immediate steps to rectify the identified control weaknesses and strengthen the internal control and good governance structures of the National Development Bank.

However, the Central Bank of Sri Lanka confirms that there is no evidence to date that any other regulated financial institution in the country has suffered financial losses due to this irregularity that occurred within the National Development Bank. Therefore, the Central Bank further requests the public to refrain from being misled by false or misleading statements made by various parties based on this incident.