Report on the audit of the consolidated and separate financial

statements of NCC Bank

Opinion

We have audited the consolidated financial statements of National Credit and

Commerce Bank Limited and its subsidiaries (the “Group”) as well as the separate
financial statements of National Credit and Commerce Bank Limited (the“Bank”), which
comprise the consolidated and separate balance sheet as at 31 December 2018, and the
consolidated and separate profit and loss account, consolidated and separate statement
of changes in equity and consolidated and separate cash flow statement for the year
then ended, and notes to the consolidated and separate financial statements, including
a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements of the Group and
separate financial statements of the Bank(the “financial statements”) give a true and fair
view of the consolidated balance sheet of the Group and the separate balance sheet of
the Bank as at 31 December 2018, and of its consolidated and separate profit and loss
accounts, consolidated and separate statement of changes in equity and its consolidated
and separate cash flow statement for the year then ended in accordance with
International Financial Reporting Standards (IFRS) as explained in note # 2 and comply
with the Banking Companies Act, 1991 (as amended up to date), the Companies Act,
1994, the rules and regulations issued by the Bangladesh Bank, the rules and regulations
issued by the Bangladesh Securities & Exchange Commission (BSEC) and other applicable
laws and regulations.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (ISA).

Our responsibilities under those standards are further described in the auditor’s
responsibilities for the audit of the consolidated and separate financial statements
section of our report. We are independent of the Group and the Bank in accordance with
the International Ethics Standards Board for Accountants’ Code of Ethics for Professional
Accountants (IESBA Code), rules & regulations issued by Bangladesh Securities and
Exchange Commission (BSEC) and Bangladesh Bank, and we have fulfilled our other
ethical responsibilities in accordance with the IESBA Code and the Institute of Chartered
Accountants of Bangladesh (ICAB) Bye-laws. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit ma�ers

Key audit matters are those matters that, in our professional judgment, were of most
significance in the audit of the financial statements for the year 2018. These matters
were addressed in the context of the audit of the financial statements, and in forming
the auditor’s opinion thereon, and we do not provide a separate opinion on these
matters. For each matter described below our description of how our audit addressed
the matter is provided in that context.

We have fulfilled the responsibilities described in the auditor’s responsibilities for the
audit of the financial statements section of our report, including in relation to these
matters.
Accordingly, our audit included the performance of procedures designed to respond to our assessment of
the
risks Risk
of
Measurement of provision for loans and
advances
The process for calculating the provision
for loans and advances portfolio
associated with credit risk is significant
and complex.
For the individual analysis, these
provisions consider the estimates of
future business performance and the
market value of collateral provided for
credit transactions.
For the collective analysis, these
provisions are manually processed that
deals with voluminous databases,
assumptions and calculations for the
provision estimates of complex design
and implementation.
At year end of 2018 the Group reported
total gross loans and advances of BDT
176,869.9 million (2017: BDT 149,633.8
million) and the Bank reported total
gross loans and advances of BDT
173,866.8 million (2017: BDT 146,633.8
million) whereas at the year end of 2018
the Group reported total provision for
loans and advances of BDT 6,178.7
million (2017: BDT 5,156.27 million) and
the Bank reported total provision for
loans and advances of BDT 5,997.8
million (2017: BDT 4,947.4 million).
We have focused on the following
significant judgments and estimates
which could give rise to material
misstatement or management bias:
Our response to the risk
We tested the design and operating
effectiveness of key controls focusing on
the following:
 Tested the credit appraisal, loan
disbursement procedures,
monitoring and provisioning
process;
 Identify loss events, including
early warning and default warning
indicators;
 Reviewed quarterly classification
ledger of loans and advances (CL);
Our substantive procedures in relation to
the provision for loans and advances
portfolio comprised the following:
 Reviewed the adequacy of the
Group and the Bank’s general and
specific provisions;
 Assessed the methodologies on
which the provision amounts
based, recalculated the provisions
and tested the completeness and
accuracy of the underlying
information;
Finally assessed the appropriateness and
presentation of disclosures against
relevant accounting standards and
Bangladesh Bank guidelines.

 Completeness and timing of

recognition of loss events in
accordance with criteria set out
in BRPD circular no 14, dated 23
September 2012 and
subsequent amendments;
 For individually assessed
provisions, the measurement of
the provision may be
dependent on the valuation of
collateral, estimates of exit
values and the timing of cash
flows;

Provision measurement is primarily

dependent upon key assumptions
relating to probability of default, ability
to repossess collateral and recovery
rates.
See note # 9(a)& 14.5 to the financial
statements.
material misstatements of the financial statements. These results of our audit procedures, including the
procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying financial statements.

Risk Our responses to risk

Measurement of deferred tax liabili�es

At year end of 2018 the Group reported total
deferred tax liabilities of BDT 351.8 million (2017:
BDT 421.6 million) and deferred tax income of BDT
66.59 million (2017: BDT 16.1 million) and the Bank
reported total deferred tax liabilities of BDT 351.8
million (2017: BDT 421.6 million) and deferred tax
income of BDT 66.59 million (2017: BDT 16.1
million).
Significant judgment is required in relation to
deferred tax liabilities as their recoverability is
dependent on forecasts of future profitability over
a number of years.
We obtained an understanding, evaluated the design
and tested the operational effectiveness of the
Bank’s key controls over the recognition and
measurement of deferred tax liabilities and the
assumptions used in estimating the Group and the
Bank’s future taxable income.
We also assessed the completeness and accuracy of
the data used for the estimations of future taxable
income.
We involved tax specialists to assess key
assumptions, controls, recognition and measurement
of deferred tax liabilities.

Finally assessed the appropriateness and

presentation of disclosures against IAS 12: Income
Tax.

See note no 14.4.1 to the financial statements

Other information

Management is responsible for the other information. The other information comprises
all of the information in the annual report other than the financial statements and our
auditor’s report thereon. The annual report is expected to be made available to us after
the date of this auditor’s report.

Our opinion on the financial statements does not cover other information and we do not express any
form of assurance

conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the
other information identified above when it becomes available and, in doing so, consider
whether the other information is materially inconsistent with the financial statements or
our knowledge obtained in the audit or otherwise appears to be materially misstated. If,
based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact. We have
nothing to report in this regard.

Responsibili�es of management and those charged with governance for the consolidated and
separate financial
 statements and internal controls

Management is responsible for the preparation and fair presentation of the financial
statementsin accordance with International Financial Reporting Standards (IFRS) as
explained in note # 2 and comply with the Banking Companies Act, 1991 (as amended up
to date), the Companies Act, 1994, the rules and regulations issued by the Bangladesh
Bank, the rules and regulations issued by the Bangladesh Securities & Exchange
Commission (BSEC) and other applicable Laws and Regulations and for such internal
control as management determines is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error. The
Banking Companies Act, 1991 (as amended up to date) and the Bangladesh Bank
guidelines require the management to ensure effective internal audit, internal control
and risk management functions of the Bank. The management is also required to make a
self-assessment on the effectiveness of anti-fraud internal controls and report to
Bangladesh Bank on instances of fraud and forgeries.

In preparing the financial statements, management is responsible for assessing the

Group’s and the Bank’s ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless
management either intends to liquidate the Bank or to cease operations, or has no
realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s and the Bank’s financial
reporting process.

Auditor’s responsibili�es for the audit of the consolidated and separate financial statements

Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to fraud or
error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit conducted in accordance
with ISA will always detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken
on the basis of these financial statements

As part of an audit in accordance with ISA, we exercise professional judgement and maintain
professional skepticism

throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements,
whether due to fraud or error, design and perform audit procedures responsive to
those risks, and obtain audit evidence that is sufficient and appropriate to provide
a basis for our opinion. The risk of not detecting a material misstatement resulting
from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.

• Obtain an understanding of internal control relevant to the audit in order to

design audit procedures that are appropriate in the circumstances.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related
disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis

of accounting and, based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may cast significant doubt
on the Group’s and the Bank’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial statements or, if
such disclosures are inadequate, to modify our opinion. Our conclusions are based
on the audit evidence obtained up to the date of our auditor’s report. However,
future events or conditions may cause the Group and the Bank to cease to
continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial

statements, including the disclosures, and whether the financial statements
represent the underlying transactions and events in a manner that achieves fair
presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of

the entities or business activities within the Group and the Bank to express an
opinion on the financial statements. We are responsible for the direction,
supervision and performance of the Group’s and Bank’s audit. We remain solely
responsible for our audit opinion.
We communicate with those charged with governance, among other matters, the
planned scope and timing of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have
complied with relevant ethical requirements regarding independence, and to
communicate with them all relationships and other matters that may reasonably be
thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine
those matters that were of most significance in the audit of the financial statements of
the current period and are therefore the key audit matters. We describe these matters in
our auditor’s report unless law or regulation precludes public disclosure about the
matter or when, in extremely rare circumstances, we determine that a matter should not
be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.

Report on other legal and regulatory requirements

In accordance with the Companies Act, 1994, the Banking Companies Act, 1991, and the
rules and regulations issued by Bangladesh Bank, the Securities and Exchange Rules
1987, we also report that:

I. We have obtained all the information and explanations which to the best of
our knowledge and belief were necessary for the purposes of our audit and
made due verification thereof;

II. to the extent noted during the course of our audit work performed on the
basis stated under the Auditor’s Responsibility section in forming the above
 opinion on the financial statements and considering the reports of the
Management to Bangladesh Bank on anti-fraud internal controls and instances
of fraud and forgeries as stated under the Management’s Responsibility for the
financial statements and internal control:

(a) internal audit, internal control and risk management arrangements of the Group and
the Bank as disclosed
in the financial statements appeared to be materially adequate;

(b) nothing has come to our attention regarding material instances of

forgery or irregularity or administrative error and exception or anything
detrimental committed by employees of the Group and the Bank;

III. financial statements of National Credit and Commerce Bank Limited's

subsidiaries namely, NCCB Securities and Financial Services Limited, been
audited by Shafiq Mizan Rahman & Augustine, Chartered Accountants and
NCCB Capital Limited have has been audited by Hoda Vasi Chowdhury & Co,
Chartered Accountants and have been properly reflected in the consolidated
financial statements;

IV. in our opinion, proper books of account as required by law have been kept by the Group and
the Bank so far as it
appeared from our examination of those books;

V. the consolidated balance sheet and consolidated profit and loss account of the
Group and the separate balance sheet and separate profit and loss account of
the Bank together with the annexed notes dealt with by the report are in
agreement with the books of account and returns;

VI. the expenditures incurred and payments made were for the purpose of the
Group’s and Bank’s business for the year;

VII. the financial statements have been drawn up in conformity with prevailing rules,
regulations and accounting
standards as well as related guidance issued by Bangladesh Bank;

VIII. adequate provisions have been made for advance and other assets which are in our opinion,
doubtful of recovery;

IX. the records and statements submitted by the branches have been properly
maintained and consolidated in the financial statements;

X. the information and explanations required by us have been received and found satisfactory;

XI. we have reviewed over 80% of the risk weighted assets of the Bank and spent over 1,200 man
hours; and
XII. capital to risk-weighted asset ratio (CRAR) as required by Bangladesh Bank has been
maintained adequately during
the year.

Report to the
Shareholders of
Grameenphone Ltd.
 (As required under the BSEC Corporate Governance
Guidelines)

We have examined the compliance status to the Corporate Governance Code by

Grameenphone Ltd. for the year ended on 31 December 2018. This Code relates to
the Notification No,BSEC/CMRRCD/2006-158/207/Admin/80 dated 3 June 2018 of the
Bangladesh Securities and Exchange Commission.

Such compliance with the Corporate Governance Code is the responsibility of the
Company. Our examination was limited to the procedures and implementation thereof
as adopted by the Management in ensuring compliance to the conditions of the
Corporate Governance Code.

This is a scrutiny and verification and an independent audit on compliance of the

conditions of the Corporate Governance Code as well as the provisions of relevant
Bangladesh Secretarial Standards (BSS) as adopted by the Institute of Chartered
Secretaries of Bangladesh (ICSB) in so far as those standards are not inconsistent with
any condition of this Corporate Governance Code.

We state that we have obtained all the information and explanations, which we have
required, and after due scrutiny and verification thereof, we report that, in our opinion:
a) The Company has complied with the conditions of the Corporate Governance Code as stipulated in
the above mentioned Corporate Governance Code issued by the Commission;
b) The Company has complied with the provisions of the relevant Bangladesh Secretarial Standards
(BSS) as adopted by the Institute of Chartered Secretaries of Bangladesh (ICSB) as required by this
Code;
c) Proper books and records have been kept by the Company as required under the Companies Act,
1994, the securities laws and other relevant laws; and
d) The Governance of the Company is satisfactory.

This is also no endorsement about quality of contents in the Annual Report of the
Company for 2018.

INDEPENDENT AUDITORS’ REPORT

To Te Shareholders on the Consolidated Financial
Statements of
BANGLADESH EXPORT IMPORT COMPANY
LIMITED AND ITS SUBSIDIARIES
 We have audited the accompanying consolidated financial statements of Bangladesh Export Import
Company Limited and its Subsidiaries(the Group)which comprise the Statement of Financial Position as
at 30 June 2018, the Statements of Profit or Loss and Other Comprehensive Income, Changes in Equity
and Cash Flows for the year from 01 July 2017 to 30 June 2018 then ended, and notes, comprising a
summary of significant accounting policies and other explanatory information.
Management’s responsibility for the financial statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with Bangladesh Financial Reporting Standards (BFRSs), the Companies Act 1994, the
Securities and Exchange Rules 1987 and other applicable laws and regulations, and for such internal control
as management determines is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
Auditors’ responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with Bangladesh Standards on Auditing (BSA). Those standards
require that we comply with relevant ethical requirements and plan and perform the audit to obtain reasonable
assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures
selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of
the financial statements, whether
due to fraud or error. In making those risk assessment, we consider internal control relevant to the entity’s
preparation and fair presentation of
the financial statements in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing
an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the
appropriateness of accounting policies
used and the reasonableness of accounting estimates made by management, as well as evaluating the
overall presentation of the financial
statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Opinion
In our opinion, the consolidated financial statements give a true and fair view of the financial position of the
company as at 30 June 2018, and
of its financial performance and its cash flows for the year then ended in accordance with Bangladesh
Financial Reporting Standards (BFRSs)
as explained in note 2.03& 3.00, the Companies Act 1994, the Securities and Exchange Rules 1987 and
other applicable laws and regulations.
Report on Other Legal and Regulatory Requirements
In accordance with the requirements of the Companies Act 1994 and the Securities and Exchange Rules 1987, we report
that:
(a) we have obtained all the information and explanations which to the best of our knowledge and belief
were necessary for the purposes of
our audit and made due verification thereof;
(b) in our opinion, proper books of account as required by law have been kept by the company so far as it
appeared from our examination of
these books ;
(c) the Statement of Financial Position (Balance Sheet) and the Statement of Profit or Loss and Other
Comprehensive Income (Profit and Loss
Account) dealt with by the report are in agreement with the books of account ; and
(d) the expenditure incurred was for the purposes of the company’s busines

Independent Auditors" Report to the shareholders

of Biman Bangladesh Airlines Limited
Report on Financial Statements

We have audited the accompanying consolidated financial statements of

Biman Bangladesh Airlines Limited and its subsidiaries (the Group) as well

as separate financial statements of Biman Bangladesh Airlines Limited (the

company) which comprise the consolidated and separate statements of

financial position as at 30 June 2017 and consolidated and separate

statements of profit or loss and other comprehensive income,

consolidated and separate statements of changes in equity and

consolidated and separate statements of cash Flows for the year then ended

and a summary of significant accounting policies and other explanatory

information disclosed in notes-I to 34 of the financial statements,

Management's Responsibility for the Finandal Statements

Management of the Company is responsible for the preparation and lair

presentation of these financial statements in accordance with Bangladesh

Financial Reporting Standards, and for such internal control as management

determines is necessary to enable the preparation of financial statements

that are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express an opinion on these financial statements

based on our audit, We conducted our audit in accordance with

Bangladesh Standards on Auditing (BSA). Those standards require that we
comply with ethical requirements and plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free from

material misstatement.

An audit involves performing procedures to obtain audit evidence about

the amounts and disclosures in the financial statements, The procedures

selected depend on the auditors' judgment, including the assessment of the

risks of material misstatement of the financial statements, whether due to

fraud or error. In n-iaking those risk assessments, the auditor considers

internal control relevant to the entity's preparation and fair presentation of

the financial statements in order to design audit procedures that are

appropriate in the circumstan s, but not for the purpose of expressing

an opinion on the effectiveness of the Company's internal control. An

audit also includes evaluating the appropriateness of accounting policies

used and the reasonableness of accounting estimates made by

management, as well as evaluating the overall presentation of the financial

staternen13.
 We believe that the audit evidence we have obtained is sufficient and

appropriate to provide a basis for our Qualified audit opinion.

Basis for Qualified Opinion

•■•

1. As disclosed in the note # 7 of the financial statements, two Airbuses classified as

Assets Held
for Sale (Airbus 310-300 S-2 ADF 11•FS-001 & S•2 ADK 11-FS-

002) have been shown at their carrying amount (written down value)

of Tk. 5E15,623,044, This is a non-compliance of pare 15 of BFRS

5: Non-current Assets Held for Sale and Discontinued Operations

which requires these Airbuses to be valued at the lower of carrying

amount and fair value less costs to sell. As a result, the Assets

Held for Sale have been overstated.

2. As disclosed in note # 19 to the financial statements, the Company has recognized

deferred

tax expense amounting Tk. 685,062,367. But, in the light of BAS 12: Taxation,

deferred tax expenditure would amount to Tk. 2,485,620,536.

Thus, profit for the year of the Company as well as of the Group

have been overstated by Tk, 1,300,558,169 with a consequential

overstatement of equity by the same amount.

Qualified Opinion

In our opinion, except for the effects of the matters described in the

Basis for Qualified Opinion paragraph, the financial statements present

fairly, in all material respects, the financial positions of the Company and

the Group as at 30 June 2017, and of its and Group's financial

performances and cash flows for the year then ended, and these financial

statements have been drawn up in accordance with the requirements of the

Bangladesh Financial Reporting Standards as disclosed in note # 2.01,

Emphasis of Matters

Without further qualifying our opinion, we draw attention to the following matters:

1. As disdcued in note # 6 to the financial statements, the Company has shown the
landing
rights at a value of Tic. 5,072,351,401, This is the vague of 41

routes estimated as of 23 luly 2007, the date at which the Company

was incorporated and take over took place. Currently 15 routes are

operative and 26 routes are non-operative. No impairment test, as

 required by BAS 36: Impairment of Assets, has been conducted.

This is a non-compliance of BAS 38: Intangible Assets, which

requires the value of these routes to be shown at fair value by

applying the required impairment test.

2, As disclosed in note * 8.1 to the financial statements, the year-end ledger balance of
Stores

and Spares amount to Tk. 5,337;907,189 against which there is a

provision for store obsolesce

li

amounting to Th 2,636,818,173, resulting in a net amount of Tk.

2,701,089,016 as Stores and Spares. Whereas, the physical

inventory report of Stores and Spares shows an amount of Tk.

2,603,423,660 (General inventory Tk, 2,336,933,302 and Airbus

inventory Tk. 266,490,358) as the year-end balance. A firm of

Chartered Accountants has been reportedly appointed to

reconcile the inventory figures of the inventory ledgers with

those in the general ledger. further, as per Para 9 of BAS 2:

inventories, the inventory should be valued at lower of cost and

Net Realizable Value (NRV) which has not been followed In this

case resulting In the possibility of more amount of write-off directly.

3. As disclosed in the note # 9.1 of the financial statements, Biman has long
outstanding
receivables from different parties amounting to Tk. 588,973,329

(receivables being outstanding from 1970 to 2015) against which

provision of Tk. 390,229,417 has been made previously, requiring

additional provision of Tk, 198,743,912 to be made in the financial

statements. This additional provision includes inter alia Tk.

143,796,060 receivable from GMG Airlines which fully closed its

business In 2012 and its membership has been cancelled by TATA

Clearing House with a declaration of non-receivable of such

amount.

4. As disclosed in note # 17 (1) to the financial statements, the Company has a loan
liability to

the Government of People's Republic of Bangladesh amounting to

Tic 1,912,543,075 for three DC- 10-30 aircrafts, but there is no

written contract or agreement In this regard,

5, As disclosed in note # IS to the financial statements, according to i3AS 19: Employee

Benefits,
 actuarial valuation is required for the defined beneficiary scheme.

The Company is maintaining provision for Pension and Gratuity

without actuarial valuation from 2011. Moreover, disclosure as per

para 57 of BAS 19 was not given in the financial statements,

6. As disclosed in note # 20.1 (Ii) to the financial statements, the Company has shown
liability

payable to Padma 011 Company Limited amounting to Tk.

11,526,470,851, whereas Padma Oil Company Limited claims an

additional amount of Tk, 5,046,718,922 as interest receivable due to

delayed payments. The Company disagrees with the additional

claim and shows the additional claim as a Contingent Liability in

note # 34 to the financial statements. Moreover, no written

agreement erdsts between Padma Oil Company Limited and

Biman Bangladesh Airlines Limited for any transaction.

7 As disclosed in note # 20.1 (iv) to the financial statements, the Company has
shown an

amount of Tk. 6,892,193,460 as payable to Civil Aviation Authority of Bangladesh

(CRAB).

However, we have not received any confirmation from CAAB about

Lhe balance of R.aj5ltahi and Chittagong airports which totals Tk.

1,607,392,258 and included in the above amount. In addition, the

Company disagrees on a portion of claim by CAAB

amounting to Th, 14,506,170,020. This is an amount of surcharge

(claimed by 0luck5) which has been disclosed in note # 34 to the

financial statements as a contingent liability.

8. As disclosed in note # 23 to the financial statements, the Company has not complied
with the

Labor Act 2006 (as amended) as regards creating separate

workers profit participation fund and welfare fund, and also In

forming a Board of Trustees in this regard. In addition, hajj bonus

has been adjusted erroneously against the provision far the fund.

9. Note # 24 to the financial statements discloses about the status of income tax
appeals and
assessments of the Company and also about non-deduction of tax

on overseas payments to non-residents.

Other Matter
 1. The financial statements of the company for the year ended 30 June 2016 were
audited jointly
by ACNAB1N, Chartered Accountants and Syful Shamsul Alain &
Co,, Chartered Accountants who expressed a qualified opinion on 29
November 2016.

2. The consolidated financial statements have been prepared on the basis of the
financial
statements of the Company and of sabre Travel Network

(Bangladesh) Limited, a subsidiary of the Company. Hoda Vasi

Chowdhury & Co„ Chartered Accountants was the auditor of

the subsidiary company.

Report on Other Legal and Regulatory Requirements

We also report that

1. We have obtained all the material information and explanations which to the
best of our
knowledge and belief were necessary for the purposes of our audit
and made due verification thereof;

2. In our opinion, proper books of account as required by law have been kept by the
Company so

far as It appeared from our examination of those books; and

3. The Company's statement of financial position and statement of profit or loss and
other
comprehensive income dealt with by the report are in agreement with the books of account
 Independent Auditor’s Report

To the shareholders of IDLC Finance Limited

Report on the audit of the consolidated and separate financial statements

Opinion

We have audited the consolidated financial statements of IDLC Finance Limited and its subsidiaries (the “Group”) as well as the
separate financial statements of IDLC Finance Limited (the “Company”), which comprise the consolidated and separate balance sheet
as at 31 December 2018, and the consolidated and separate profit and loss account, consolidated and separate statement of changes
in equity and consolidated and separate cash flow statement for the year then ended, and notes to the consolidated and separate
financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements of the Group and separate financial statements of the Company give a true
and fair view of the consolidated balance sheet of the Group and the separate balance sheet of the Company as at 31 December 2018, and of its
consolidated and separate profit and loss accounts and its consolidated and separate cash flows for the year then ended in accordance with
International Financial Reporting Standards (IFRSs) as explained in note # 2 and comply with the Financial Institutions Act, 1993, the Rules and
Regulations issued by the Bangladesh Bank, the Companies Act, 1994 and other applicable Laws and Regulations.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further
described in the auditor’s responsibilities for the audit of the consolidated and separate financial statements section of our report. We are
independent of the Group and the Company in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for
Professional Accountants (IESBA Code), Bangladesh Securities and Exchange Commission (BSEC) and Bangladesh Bank, and we have fulfilled
our other ethical responsibilities in accordance with the IESBA Code and the Institute of Chartered Accountants of Bangladesh (ICAB) Bye Laws.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial
statements for 2018. These matters were addressed in the context of the audit of the financial statements, and in forming the auditor’s
opinion thereon, and we do not provide a separate opinion on these matters. For each matter below our description of how our audit
addressed the matter is provided in that context.

We have fulfilled the responsibilities described in the auditor’s responsibilities for the audit of the financial statements section of our
report, including in relation to these matters.

Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material
misstatements of the financial statements. These results of our audit procedures, including the procedures performed to address the
matters below, provide the basis for our audit opinion on the accompanying financial statements.
Riggg Our response to the risk

Measurement of provision for loans and advances

The process for estimating the provision for loans and advances We tested the design and operating effectiveness of key controls

portfolio associated with credit risk is significant and complex. focusing on the following:

For the individual analysis, these provisions consider the • Tested the credit appraisal, loan disbursement procedures,

estimates of future business performance and the market value monitoring and provisioning process;

of collateral provided for credit transactions.

• Identification of loss events, including early warning and default

For the collective analysis, these provisions are manually warning indicators;

processed that deals with voluminous databases, assumptions • Reviewed quarterly classification of loans (CL);

and calculations for the provision estimates of complex design

and implementation.
Our substantive procedures in relation to the provision for loans and

At year end of 2018 the Group reported total gross loans and advances portfolio comprised the following:

advances of BDT 83,934,280,017 (2017: BDT 71,498,548,035) • Reviewed the adequacy of the companies general and specific

and provision for loans and advances of BDT 1,318,975,417

provisions;
(2017: BDT 1,145,270,344).
• Assessed the methodologies on which the provision amounts

We have focused on the following significant judgements and

based, recalculated the provisions and tested the completeness

estimates which could give rise to material misstatement or

and accuracy of the underlying information;
management bias:

• Completeness and timing of recognition of loss events • Finally assessed the appropriateness and presentation of

disclosures against relevant accounting standards and Bangladesh

in accordance with criteria set out in FID circular no 08,
Bank guidelines.

dated 03 August 2002, FID circular no. 03, dated 03 May

2006 and FID circular no.03 dated 29 April 2013;

• For individually assessed provisions, the measurement of

the provision may be dependent on the valuation of
collateral, estimates of exit values and the timing of cash
flows;

• Provision measurement is primarily dependent upon key

assumptions relating to probability of default, ability to
repossess collateral and recovery rates;

In 2018, the Group and the Company reports net deferred We obtained an understanding, evaluated the design and tested

tax assets (DTA) amounted to BDT 67,344,846 (2017: BDT the operational effectiveness of the Group’s key controls over the

40,762,419) recognition and measurement of DTAs and the assumptions used in

Significant judgment is required in relation to deferred tax estimating the Group’s future taxable income.
assets as their recoverability is dependent on forecasts of future We also assessed the completeness and accuracy of the data used for

profitability over a number of years. the estimations of future taxable income.

We involved tax specialists to assess key assumptions, controls,

recognition and measurement of DTA’s.

Finally assessed the appropriateness and presentation of disclosures

against IAS 12 Income Tax.

See note # 9.4 to the financial statements

Other information

The other information comprises all of the information in the Annual Report other than the consolidated and separate financial
statements and our auditor’s report thereon. We obtained Director’s report and performance analysis with the management committee
prior to the date of our auditor’s report. We expect to obtain the remaining reports of the Annual report after the date of our auditor’s
report. Management is responsible for the other information

Our opinion on the consolidated and separate financial statements does not cover other information and we do not express any form of
assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information identified above when it
becomes available and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we

have performed on the other information obtained prior to the date of the auditor’s report, we conclude that there is a material
misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of management and those charged with governance for the consolidated and separate financial statements
and internal controls

Management is responsible for the preparation and fair presentation of the consolidated and separate financial statements of the Group and also
separate financial statements of the Company in accordance with IFRSs as explained in note 2 and for such internal control as management
determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
The Financial Institutions Act, 1993 and the Bangladesh Bank guidelines require the management to ensure effective internal audit, internal
control and risk management functions of the Company. The management is also required to make a self-assessment on the effectiveness of
anti-fraud internal controls and report to Bangladesh Bank on instances of fraud and forgeries.

In preparing the consolidated and separate financial statements, management is responsible for assessing the Group’s and the
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless management either intends to liquidate the company or to cease operations, or has no realistic
alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s and the Company’s financial reporting process.

Auditor’s responsibilities for the audit of the consolidated and separate financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated and separate financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these consolidated and separate financial statements

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional skepticism throughout the
audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis
for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s and the
Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our
auditor’s report to the related disclosures in the consolidated and separate financial statements or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events
or conditions may cause the Group and the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the consolidated and separate financial statements, including the disclosures,
and whether the consolidated and separate financial statements represent the underlying transactions and events in a manner that
achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group
to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the
Company’s audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance, among other matters, the planned scope and timing of the audit and significant
audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of
the consolidated and separate financial statements of the current period and are therefore the key audit matters. We describe these matters in
our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine
that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.

Report on other legal and regulatory requirements

In accordance with the Companies Act, 1994, the Securities and Exchange Rules,1987, the Financial Institutions Act, 1993 and the rules and regulations
issued by Bangladesh Bank, we also report that:

(i) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the
purpose of our audit and made due verification thereof;

(ii) in our opinion, proper books of account as required by law have been kept by the Company so far as it appeared from our
examination of those books;

(iii) the consolidated balance sheet and consolidated profit and loss account together with the annexed notes dealt with by the
report are in agreement with the books of account and returns;

(iv) the expenditures incurred and payments made were for the purpose of the Company’s business for the year;
(v) the financial statements of the Company have been drawn up in conformity with the Financial Institutions Act, 1993 and in
accordance with the accounting rules and regulations which were issued by Bangladesh Bank to the extent applicable to the
Company;

(vi) adequate provisions have been made for loans, advances, leases, investment and other assets which are, in our opinion, doubtful of
recovery and Bangladesh Bank’s instructions in this regard have been followed properly;

(vii) the financial statements of the Company conform to the prescribed standards set in the accounting regulations which were issued by
Bangladesh Bank after consultation with the professional accounting bodies of Bangladesh;

(viii) the records and statements which were submitted by the branches have been properly maintained and recorded in the financial
statements;

(ix) statement sent to Bangladesh Bank have been checked on sample basis and no inaccuracy has come to our attention;
(x) taxes and duties were collected and deposited in the Government treasury by the Company as per Government instructions found
satisfactory based on test checking;

(xi) nothing has come to our attention that the Company has adopted any unethical means i.e. “Window dressing” to inflate the
profit and mismatch between the maturity of assets and liabilities;

(xii) proper measures have been taken to eliminate the irregularities mentioned in the inspection report of Bangladesh Bank and the
instructions which were issued by Bangladesh Bank and other regulatory authorities have been complied properly as disclosed to us by
management;

(xiii) based on our work as mentioned above under the auditor’s responsibility section, the internal control and the compliance of the
Company is satisfactory, and effective measures have been taken to prevent possible material fraud, forgery and internal
policies are being followed appropriately;

(xiv) the Company has complied with relevant laws pertaining to capital, reserve, and net worth, cash and liquid assets and
procedure for sanctioning and disbursing loans/ leases found satisfactory;

(xv) we have reviewed over 80% of the risk weighted assets of the Group & Company and we have spent around 960 person hours
for the audit of the books and accounts of the Company;

(xvi) the Company has complied with relevant instructions which were issued by Bangladesh Bank relevant to classification, provisioning and
calculation of interest suspense;

(xvii) the Company has complied with the ‘’First Schedule” of the Financial Institutions Act,1993 in preparing these financial
statements; and

(xviii) all other issues which in our opinion are important for the stakeholders of the Company have been adequately disclosed in the
audit report.