The Central Bank of Sri Lanka (CBSL) has clarified that Ernst & Young (E&Y) Sri Lanka remains eligible to audit licensed banks, despite restrictions imposed on two of its audit partners following the disclosure of an internal fraud at National Development Bank PLC (NDB).
In a statement issued on Tuesday (10), the Central Bank said it had requested E&Y not to assign the Engagement Partner and Quality Assurance Partner involved in auditing NDB’s financial statements to any licensed bank audit engagements.
However, the CBSL emphasised that the restriction does not affect E&Y’s recognition as a qualified auditor eligible to audit licensed banks in Sri Lanka under the Banking Act, No. 30 of 1988, as amended.
The clarification comes amid developments surrounding the major internal fraud uncovered at NDB earlier this year.
NDB initially disclosed the fraud in April 2026, estimating losses at Rs. 13.2 billion. However, a subsequent independent forensic investigation conducted by Deloitte Touche Tohmatsu India LLP established the total value of fraudulent transactions at approximately Rs. 13.64 billion.
According to the findings disclosed in September, the fraud involved transactions spanning multiple financial periods, with Rs. 9.62 billion attributed to 2025 alone.
The bank previously stated that the fraud involved certain employees acting in collusion with external parties.
The forensic investigation also identified weaknesses in internal controls, transaction monitoring, account reconciliation and governance procedures.
NDB has maintained that customer accounts and deposits were not affected by the incident.
The Central Bank has continued to monitor the bank’s financial position and regulatory compliance following the disclosure of the fraud. (Newswire)
