Page 106 - 2596-CA SR Lanka- Annual Report 2022

NOTES TO THE FINANCIAL STATEMENTS

Note 13 - Endowment funds
Balance as Contribution Donations (Payments) Balance as Balance as
at 1.1.2022 from the received at 31.12.2022 at 31.12.2021
Institute
Rs.'000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000
Capital balances - prize funds 1,392 - - - 1,392 1,392
Income balances - prize funds 385 313 - (520) 178 385
Total endowment funds 1,777 313 - (520) 1,570 1,777

Note 14 - Retirement benefit obligation
As at 31 December 2022 2021
Note Rs.'000 Rs.'000
Balance at the beginning of the year 25,974 36,027
Provision made during the year 14.1 778 217
Payments made during the year (1,678) (10,270)
Balance at the end of the year 25,074 25,974

14.1 - Provision made during the year
Past Service Cost - (1,415)
Interest cost 2,935 2,882
Current service cost 3,960 3,095
6,895 4,562
Net actuarial (gain)/loss recognised (6,117) (4,345)
Total provision made during the year 778 217

Under the Gratuity Act No.12 of 1983, gratuity liability arises only upon an employee completing a continuous service of five years.

14.2 Principal actuarial assumptions used
Actuarial and Management Consultants (Pvt) Ltd., qualified actuaries carried out an actuarial valuation on the defined benefit plan-gratuity as at
31 December 2022. The assumptions used in determining the cost of retirement benefits are as follows.
Assumption 2022 2021

Discount interest rate* 19% per annum 11.3% per annum
Staff turnover rate 17% per annum 13% per annum
Salary increment rate 7.0% 7.0%
Retirement age 60 years 60 years

* In the absence of a deep market in long term bonds in Sri Lanka, a long term interest rate of 19% p.a ( 2021 - 11.3% p.a) has been used to
discount future liabilities considering anticipated long term rate of inflation.

14.3 Sensitivity analysis
The following table demonstrates the sensitivity to a reasonably possible change in the key assumptions used with all other variables held
constant in the retirement benefit obligation measurement.
As at 31 December 2022 2021
Increase / (decrease) Increase / (decrease)
of defined benefit of defined benefit
obligation obligation
Rs. ‘000 Rs. ‘000

Sensitivity analysis to discount rate
1% increase in discount rate (732) (1,215)
1% decrease in discount rate 779 1,332
Sensitivity analysis to salary escalation rate
1% increase in salary escalation rate 909 1,429
1% decrease in salary escalation rate (862) (1,322)

104 CA SRI LANKA | Integrated Annual Report 2022