ASSIGNMENT

on
“Audit Report of National Bank”
Course Title: Auditing
Course Code: 0411ACC315
Semester: Spring 2025
Program: BBA
Batch: 80 AB

Submitted To:
Ifrad Jahan
Senior Lecturer
Department of Business Administration,
Stamford University Bangladesh.

Submitted By:
Mohtashim Mohammed Zahin
ID: BBA 080 19805
Program: BBA
Batch: 80 AB

Date of Submission: 26 February 2025

Independent Auditors’ Report

To the Shareholders of National Bank Limited

Report on the Audit of the Consolidated and Separate Financial Statements

Opinion

We have audited the consolidated financial statements of National Bank Limited and
its subsidiaries (the "Group") as well as the separate financial statements
of National Bank Limited (the "Bank"), which comprise the consolidated and separate
Balance Sheets as at 31 December 2023, and consolidated and separate
Profit and Loss Accounts, consolidated and separate statement of Changes in Equity,
and consolidated and separate Cash Flow Statements for the year then
ended, and notes to the consolidated and separate financial statements, including a
summary of significant accounting policies and other explanatory
Information.

In our opinion, the accompanying consolidated financial statements of the Group and
separate financial statements of the Bank 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 2023, 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.

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
Auditors' 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), 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 judgment, were of most
significance in our audit of the consolidated and separate financial
statements of the current period. These matters were addressed in the context of our
audit of the consolidated and separate financial statements as a whole,
and in forming our opinion thereon and we do not provide a separate opinion on these
matters.
Description of key audit matters Our response to key audit matters
The process for estimating the provision We tested the design and operating
for loans & advances portfolio associated effectiveness of key controls focusing on
with credit risk is significant, judgmental the following:
and complex. While estimating such • Credit monitoring and provisioning
provision certain judgmental factors need process;
to be considered including: • Identification of loss events, including
• Future business performance of the early warning and default warning
borrower; indicators; and
• Key assumptions relating to further • Review of quarterly Classification of
business performance of the borrower; Loans (CL). • Follow Bangladesh Bank's
• Market value of the collateral; circular and guidelines; Our substantive
• Ability to repossess collateral; and procedures in relation to the provision
• Recovery rates. for loan and advances portfolio
Furthermore, these provisions are comprised the following:
processed manually using the voluminous • Reviewed general and specific
data extracted from the IT system of the provisions kept by the bank;
Bank and following the instructions of • Assessed the methodologies on which
Bangladesh Bank (the central bank of the provision amounts based, checked
Bangladesh) issued from time to time. the calculations of the provisions and
Due to high level of judgement involved tested the completeness and accuracy of
and using some manual process in the underlying information.
estimating the provision for loans and • Assessed the appropriateness and
advances, we considered this to be a key presentation of disclosures against
audit matter. For individually assessed relevant accounting standards and
provisions, the measurement of the Bangladesh Bank guidelines.
provision may be dependent on the • Finally, compared the amount of
valuation of collateral, estimates of exit provision requirement as determined by
values and the timing of cash flows. Bangladesh Bank to the actual amount of
Provision measurement is primarily provision maintained.
dependent upon key assumptions relating In response to the identified key audit
to probability of default, ability to matter regarding the interest waiver and
repossess collateral and recovery rates. At its impact on the bank’s profitability we
the year end the Bank reported total gross have focused on the following:
loan and advances of BDT 430,025.83
million (2022: BDT 425,065.55 million)
and total provision for Loan and Advances
BDT 18,896.69 Million including
provision for good borrowers (2022: BDT
18,848.09 Million) (solo basis). We have
focused on the following significant
judgments and estimates which could give
rise to material misstatement or
management bias:

Description of key audit matters Our response to key audit matters

 Checked whether any principal
 Completeness and timing of amount has been waived,
recognition of loss events in  Performed a comprehensive review
 accordance with criteriaset out in of the management's estimation
BRPD circular no 14, dated 23 process used to determine the
September 2012, BRPD circular no. intangible asset and its amortization
03dated 21 April 2019, BRPD over eight years, as per the
circular no. 17 dated 28 September Bangladesh Bank's directive.
2020, BRPDcircular no. 56 dated 10  Evaluated the adequacy of the
December 2020 and BRPD Circular disclosures related to these
no. 51 dated 18December 2022. transactions in the financial
Later on, after 2020, Bangladesh statements. Finally, checked the
Bank considered the negative impact of related approval letters of
subsequent waves of Covid-19 and the Bangladesh Bank in this regard.
macro-economic global crisis caused by The audit procedures related to this
the Russia-Ukraine war and time to time matter include:
issued several circulars including BRPD  Evaluated the entity’s liquidity
Circular no. 3 dated 31 January, 2021, no. position and cash flow s to identify
5 dated 24 March, 2021, BRPD Circular any potential liquidity shortage.
letter no, 51 dated 29 December 2021, no.  Assessed the adequacy of the
53 dated 30 December 2021 and BRPD entity’s liquidity risk management
Circular No. 14 dated 22 June 2022, letter policies and procedures
no. 51 dated 18 December 2022. Through  Analyzed the liquidity statement
them Bangladesh Bank allowed banks to etc.
sustain a moratorium on downgrading the We tested the design and operating
classification of loans and advances if effectiveness of key controls over
they meet certain conditions, including recognition and measurement of interest
receiving by 31 December 2021 at least on loans and advances.
15% of the total installments due on 2021, We performed test of operating
and by 31 December 2022, at least 50%, effectiveness on automated control in
60% and 50% of the total installments due place to measure and recognize interest
for the quarter April-June 2022, July- income.
September 2022 and October-December We have also performed substantive
2022 respectively. procedure to check whether interest
Waiver of Interest/ Charge on loan income is recognized completely and
loss/ Intangible asset accurately. We assessed the
Throughout this year, a sum of total BDT appropriateness and presentation of
40.38 million has been waived as Interest disclosure against relevant accounting
and recorded as charges on loan loss in the standards and Bangladesh Bank
profit & Loss account. This has led to a guidelines. Finally, we also conducted
substantial decline in the bank's substantive analytical procedures to
profitability and a negative earnings per asses reasonableness of interest
share (EPS) for the year. However, this recognized during the year with
waiver includes BDT 23,463.73 million reference to the product wise outstanding
which has been recognized as an loan balances.
intangible asset in note 10.1.4, which has We performed several analytical and
to be adjusted with retained earnings over substantive procedures to check whether
a span of 8 years equally from the year the calculations relating to the interest
(2023), in accordance with the directive of income, cost of deposits and borrowings
Description of key audit matters
Our response to key audit matters
Bangladesh Bank vide
DOS(CAMS)1157/01(II)-A/2023-44
dated 03.01.2023. The magnitude of these and the EPS are accurate or not.
transactions has a significant impact on
the financial statements of the bank, and We tested the design and operating
as such, they have been deemed a critical effectiveness of key controls focusing on
audit matter. credit appraisal, loan disbursement
procedures and monitoring process as
See note no 10.1.4 to the financial well as the percentage of non-performing
statements loan of loans and advances. We have
Liquidity performed procedure to check whether
The liquidity statement of the bank upon the Bank has ensured appropriate
analyzing the maturity of the assets and documentation as per Bangladesh Bank
liabilities projects negative liquidity gap regulations and the Bank's policy before
of 9,032.03 million at no more than one disbursement of loans and advances. In
month term, BDT 14,122.73 million at 1-3 addition, we have performed procedure
months term and BDT 1,012.00 million at to check whether the loans and advances
3-12 months term indicating multiple is recorded completely and accurately
instances of liquidity challenges. During and that are existed at the reporting date.
the year the bank has higher ADR over Furthermore, we have assessed the
regulatory limit. The consequence of the appropriateness of disclosure against
liquidity challenge and the associated risk Bangladesh Bank guidelines.
with it have made us determine it as key We assessed the processes and controls
audit matter. put in place by the Group to identify and
See Liquidity statement (Analysis of confirm the existence of financial
Maturity of Assets and Liabilities) of instruments.
the financial statements. We obtained an understanding, evaluated
Recognition of interest income from the design and tested the operating
loans and advances and cost of effectiveness of the key controls over the
deposit and borrowings and financial instruments valuation
decreased profitability processes, including controls over
Recognition of interest income has market data inputs into valuation models,
significant and wide influence on financial model governance and valuation
statements. Recognition and measurement adjustments. Finally we assessed the
of interest income has involvement of appropriateness and presentation of
complex IT environment. We identify disclosures against relevant accounting
recognition of interest income from loans standards and Bangladesh Bank
and advances as a key audit matter guidelines.
because this is one of the key performance We have assessed the processes and
indicators of the Bank and therefore there controls put in place by the Bank to
is an inherent risk of fraud and error in ensure all major investment decisions are
recognition of interest by management to undertaken through a proper due
meet specific targets or expectations. diligence process.
Moreover, as per Bangladesh Bank BRPD We tested a sample of investments
circular no 53 dated 30 December 2021, valuation as at 31 December 2023 and
BRPD Circular No. 14 dated 22 June compared our results to the recorded
2022, ltter no. 51 dated 18 December value. Finally, we assessed the
2022, considering appropriateness and presentation of
Description of key audit matters Our response to key audit matters

future risk banks were allowed to

recognize outstanding/arrear interest disclosures against relevant accounting
income on loans where deferral facilities standards and Bangladesh Bank
were given upon receiving at least 15% of guidelines.
the total receivable amount by 31 We have reviewed management's
December and 50%, 60% and 50% of the analysis of impairment assessment and
total installments due for the quarter recoverable value calculation of
April-June 2022, July-September 2022 subsidiaries in accordance with IAS 36:
and October-December 2022 respectively
by 31 December 2022. The bank has Impairment of asset.
reported interest income of BDT We have analyzed the appropriateness of
15,918.16 Million, which is 13.54% lower the value in use model, the key
than the previous year (2022: BDT assumptions used in the model, the
18,411.97 Million). Meanwhile, the cost reasonably possible alternative
of deposits and borrowings as reported by assumptions, particularly where they had
the bank is BDT 30,566.64 million (2022: the most impact on the value in use
BDT 28,306.58 million). As a result, calculation.
along with the outcome of continuous
downgrade of recoverability of the loans We obtained an understanding, evaluated
because of the effect of covid-19 the design and tested the operational
pandemic, major increase in non-perform- effectiveness of the Bank's key controls
ing loan, decrease in interest income as over the recognition and measurement of
well as the effect of the interest waiver DTAs and the assumptions used.
mentioned previously, the bank has
incurred net loss of BDT 15,156.41 We also assessed the completeness and
million (solo basis) during the year and accuracy of the data used.
the EPS has been upgrad- ed to (4.71)
from (10.20) (solo basis) as compared to We involved tax specialists to assess key
previous year Accordingly, this has been assumptions, controls, recognition and
considered as key audit matter measurement of DTA's. Finally assessed
See note no 22,23 and 39.02 to the the appropriateness and presentation of
financial statements disclosures against IAS 12 Income Tax.
Loans and advances
Loans and advances are the main element We tested the design and operating
of financial statements of the Bank. effectiveness of the Bank's IT access
Income of the Bank is mainly dependent controls over the information systems
on the portfolio of loans and advances. that are critical to financial reporting.
Management performance is highly
dependent on the target achievement of We tested IT general controls (logical
loans and advances. Loan disbursement access, changes management and aspects
requires robust documentation followed of IT operational controls). This included
by approval from appropriate level of testing that requests for access to
authority. We have identified loans and systems were appropriately reviewed and
advances as key audit matter because authorized. We tested the Bank's
there is an inherent risk of fraud in periodic review of access rights and
disbursement of loans and advances by reviewed requests of changes to systems
management to meet specific targets or for appropriate approval and
expectations. In addition, the bank authorization.
Description of key audit matters

reported non-performing loan of BDT Our response to key audit matters

157,249.00 Million, 47.37% higher than We considered the control environment
the previous year (2022: BDT 106,703.50
Million), which is 36.57% of the total relating to various interfaces,
loans and advances configurations and other application
Valuation of treasury bill and layer controls identified as key to our
treasury bond audit.
The classification and measurement of We obtained an understanding, evaluated
treasury bill and treasury bond require the design and tested the operational
judgment and complex estimates. In the effectiveness of the Bank's key controls
absence of a quoted price in an active over the legal provision and
market, the fair value of treasury bill and contingencies process.
treasury bond is determined using
complex valuation techniques which may We enquired to those charged with
take into consideration direct or indirect governance to obtain their view on the
unobserva- ble market data and complex status of all significant litigation and
pricing models which require an elevated regulatory matters.
level of judgement.
We obtained an understanding, evaluated
See note no 7.1.1 to the financial the design and tested the operational
statements effectiveness of the Bank's key controls
Impairment assessment of unquoted over the legal provision and
investments contingencies process.
In the absence of a quoted price in an
active market, the fair value of unquoted We enquired to those charged with
shares and bonds, especially any governance to obtain their view on the
impairment is calculated using valuation status of all significant litigation and
techniques that may take into regulatory matters.
consideration direct or indirect
unobservable market data and hence
require an elevated level of judgement.
See note no 7 to the financial statements.
Carrying Value of Investment in
Subsidiaries by the Bank
The Bank has invested in equity shares of
its subsidiaries namely NBL Securities
Ltd. (Local), NBL Capital and Equity
Management Ltd. (Local), NBL Money
Transfer Pte Ltd. (Singapore), NBL
Money Transfer Sdn Bhd (Malay- sia),
NBL Money Transfer (Maldives) Private
Ltd. and NBL Money Transfer Payment
Foundation SA (Greece). As at 31
December 2023, the carrying value of
these investments are BDT 4,365.30
million (2022: BDT 4,456.01 million). At
the time of conducting our audit of the
separate financial statements of the Bank,
Description of key audit matters;

we have considered the recoverable value

of the Bank's investments in NBL
Securities Ltd. (Local), NBL Capital and
Equity Manage ment Ltd. (Local), NBL
Money Transfer Pte Ltd. (Singapore),
NBL Money Transfer Sdn Bhd
(Malaysia), NBL Money Transfer
(Maldives) Private Ltd. and NBL Money
Transfer Payment Foundation SA
(Greece) at cost. Management has
conducted impairment assessment and
calculated recoverable value of its
subsidiary NBL Securities Ltd. (Local),
NBL Capital and Equity Management Ltd.
(Local), NBL Money Transfer Pte Ltd.
(Singapore), NBL Money Transfer Sdn
Bhd (Malaysia), NBL Money Transfer
(Maldives) Private Ltd. and NBL Money
Transfer Payment Foundation SA
(Greece) in accordance with IAS 36.
See note no 7 to the financial statements
Measurement of Deferred Tax Assets
(DTA)
At the year end of 31 December 2023 the
Bank reported total deferred tax assets of
BDT 9,506.45 million (31 December
2022: BDT 3,007.80) and deferred tax
income of BDT 6,498.65 million (2022:
BDT 2,894.98 million). Significant
judgment is required in relation to
deferred tax assets, as their recoverability
is dependent on forecasts of future
profitability over a number of years.
Accordingly, this area has been
considered as key audit matter.

IT Systems and Controls

Our audit procedures have a focus on IT
systems and controls due to the pervasive
nature and complexity of the IT
environment, the large volume of
transactions processed in numerous
locations daily and the reliance on
automated and IT dependent manual
controls. Our areas of audit focus included
user access management, developer access
to the production environment and
changes to the IT environment. These are
key to ensuring IT dependent and
application-based controls are operating
effectively.
 Legal & Regulatory Matters
We focused on this area because the Bank
and its subsidiaries (the "Group") operate
in a legal and regulatory environment that
is exposed to significant litigation and
similar risks arising from disputes and
regulatory proceedings. Such matters are
subject to many uncertainties and the
outcome may be difficult to predict.

These uncertainties inherently affect the

amount and timing of potential outflows
with respect to the provisions which have
been established as other contingent
liabilities. Overall, the legal provision
represents the Group's and the Bank's best
estimate for existing legal matters that
have a probable and estimable impact on
the Group's financial statement.
Materiality: The scope of our audit was influenced by our application of materiality.
We set certain quantitative thresholds for materiality. These together with qualitative
considerations, helped us to determine the scope of our audit and the nature, timing
and extent of our audit procedures on the individual financial statement line items and
disclosures and in evaluating the effect of misstatements, both individually and in
aggregate on the financial statements as a whole. Other Information: Management is
responsible for the other information. The other information comprises all the
information in the Annual Report other than the consolidated and separate financial
statements and our auditors' report thereon. Our opinion on the financial statements
does not cover the other information and we do not express any form of assurance
conclusion thereon. In connection with our audit of the consolidated and separate
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 this
audit 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 financial
statements of the Group and also separate financial statements of the Bank in
accordance with IFRSs as explained in note 2 and for such internal control as
management determines is necessary to enable the preparation of consolidated and
separate financial statements that are free from material misstatement whether due to
fraud or error. The Bank Company Act, 1991 (amended up to date) and the
Bangladesh Bank Regulations 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 consolidated and separate 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
Group and 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.

Auditors’ 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 IASs, we exwecise professional judgement and

maintain professional skepticism throughout the audit . We also:
 Identified and assessed the risks of material misstatement of the consolidated and
separate financial statements, whether due to fraud or error,
designed and performed audit procedures responsive to those risks, and obtained 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.
 Obtained an understanding of internal control relevant to the audit in order to
design audit procedures that are appropriate in the circumstances.
 Evaluated the appropriateness of accounting policies used and the reasonableness
of accounting estimates and related disclosures made by
management.
 Concluded 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 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 Bank to cease to contenueas a going concern.
● Evaluated 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.
 Obtained sufficient appropriate audit evidence regarding the financial information
of the entities or business activities within the Group to express anopinion on the
consolidated financial statements. We are responsible for the direction,
supervision and performance of the group audit. We remain
solely responsible for our audit opinion.

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 Securities and Exchange Rules
1987, the Bank Company Act, 1991 (as amended up to date), the Financial
Reporting Act 2015, and the rules and regulations issued by Bangladesh Bank, we
also report that:
1)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;
2)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 consolidated 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:
3)financial statements of all subsidiaries of the Bank which have been audited by the
other auditors have been properly reflected in the consolidated
financial statements;
4)in our opinion, proper books of accounts as required by law have been kept by the
Group and the Bank so far as it appeared from our examination of those
books;
5)the records and statements submitted by the branches have been properly
maintained and consolidated in the financial statements;
6)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;
7)the expenditures incurred were for the purpose of the Bank’s business for the year;
 8)the consolidated financial statements of the Group and the separate financial
statements of the Bank have been drawn up in conformity with prevailing
rules, regulations and accounting standards as well as related guidance issued by
Bangladesh Bank;
9)provisions have been made for loans and advances and others as per Bangladesh
Bank’s letter no DBI-5(IS)/(152)/2024-549 dated April 24, 2024 and DOS
letter no DOS(CAMS)1157/41(dividend)/2024-1730 dated April 25, 2024;
.
10)the information and explanations required by us have been received and found
satisfactory;
11)we have reviewed over 80% of the risk weighted assets of the Bank and spent over
4150 person hours; and
12) Capital to Risk –weighted Asset Ratio (CRAR) and the AD Ratio as required by
Bangladesh Bank has not been maintained adequately by the bank and AD
Ratio of the bank is 98.49% which is beyond the limit during the year.
internal audit, internal control and risk management arrangements of the Group as
disclosed in the financial statements appeared to be materially
adequate;
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 its related entities (other than matters
disclosed in these financial statements).

Signed for and on behalf of

Place: Dhaka
Date: 29 April 2024 Aziz
Halim Khair Choudhury
Chartered Accountants

Signed by:

Md.Af
tab Uddin Ahmed FCA

Senior Partner
ICAB Enrolment no.804 DVC:
2404290804AS575507