Notes to the Consolidated Financial Statements - Seylan Bank
Notes to the Consolidated Financial Statements - Seylan Bank
Notes to the Consolidated Financial Statements - Seylan Bank
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North Bound > <strong>Seylan</strong> <strong>Bank</strong> Annual Report 2011<br />
287<br />
Measurement of segment assets, liabilities, segment revenue and results is based on <strong>the</strong> accounting<br />
policies set out above. Segment revenue results, assets and liabilities include items directly attributable <strong>to</strong><br />
segments as well as those that can be allocated on a reasonable basis.<br />
Disclosure by geographical region is not provided for as <strong>the</strong> Group’s activities are located in Sri Lanka and<br />
<strong>the</strong> economic environment in which <strong>the</strong> Group operates is not subject <strong>to</strong> risk and return that are significantly<br />
different on a geographical basis.<br />
3.5.15 Cash Flow<br />
The cash flow has been prepared using <strong>the</strong> Direct Method of preparing cash flows in accordance with <strong>the</strong><br />
Sri Lanka Accounting Standard 9 - ‘Cash Flow <strong>Statements</strong>’.<br />
For <strong>the</strong> purpose of <strong>the</strong> Cash Flow Statement, cash and cash equivalents include notes and coins on hand,<br />
unrestricted balances held with Central <strong>Bank</strong> and highly liquid financial assets with original maturities of<br />
less than three months, which are subject <strong>to</strong> insignificant risk of changes in <strong>the</strong>ir value, and are used by <strong>the</strong><br />
<strong>Bank</strong> in <strong>the</strong> management of its short-term commitments.<br />
3.5.16 <strong>Financial</strong> Risk Management<br />
(a) Introduction and Overview<br />
<strong>Bank</strong> has implemented a risk management framework in order <strong>to</strong> identify, measure, mitigate and control<br />
<strong>the</strong> various risk falling within market credit and operational risk.<br />
The <strong>Bank</strong> has exposure <strong>to</strong> <strong>the</strong> following risks from financial instruments:<br />
• Credit risk<br />
• Liquidity risk<br />
• Market risk<br />
• Operational risk<br />
(b) Risk Management Framework<br />
The Board of Direc<strong>to</strong>rs has overall responsibility for <strong>the</strong> establishment and oversight of <strong>the</strong> <strong>Bank</strong>’s risk<br />
management framework. The Board has established <strong>the</strong> Asset and Liability (ALCO), Risk Management<br />
Committees, which are responsible for developing and moni<strong>to</strong>ring risk management policies in <strong>the</strong>ir<br />
specified areas. All Board Committees have both executive and non-executive members and report regularly<br />
<strong>to</strong> <strong>the</strong> Board of Direc<strong>to</strong>rs on <strong>the</strong>ir activities.<br />
The risk management policies are established <strong>to</strong> identify and analyse <strong>the</strong> risks faced by <strong>the</strong> <strong>Bank</strong>, <strong>to</strong> set<br />
appropriate risk limits and controls, and <strong>to</strong> moni<strong>to</strong>r risks and adherence <strong>to</strong> limits. Risk management policies<br />
and systems are reviewed regularly <strong>to</strong> reflect changes in market conditions, products and services offered.<br />
The <strong>Bank</strong>, through its training and management standards and procedures, aims <strong>to</strong> develop a disciplined<br />
and constructive control environment, in which all employees understand <strong>the</strong>ir roles and obligations.<br />
The Audit Committee is responsible for moni<strong>to</strong>ring compliance with <strong>the</strong> risk management policies<br />
and procedures.