Page 108 - CA Sri Lanka Integrated Annual Report 2023

NOTES TO THE FINANCIAL STATEMENTS

13 ENDOWMENT FUNDS
Balance Contribution Balance Balance
as at from the as at as at
1.1.2023 Institute 31.12.2023 31.12.2022
Rs.'000 Rs.'000 Rs.'000 Rs.’000

Capital balances - prize funds 1,392 - 1,392 1,392
Income balances - prize funds 178 511 689 178
Total endowment funds 1,570 511 2,081 1,570
14 RETIREMENT BENEFIT OBLIGATION
As at 31 December 2023 2022
Note Rs.'000 Rs.'000

Balance at the beginning of the year 25,074 25,974
Provision made during the year 14.1 15,534 778
Payments made during the year (11,452) (1,678)
Balance at the end of the year 29,156 25,074

14.1 Provision made during the year

Interest cost 4,764 2,935
Current service cost 2,190 3,960
6,954 6,895
Net actuarial loss/(gain) recognised 8,580 (6,117)
Total provision made during the year 15,534 778

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 2023. The assumptions used in determining the cost of retirement benefits are as follows,
Assumption 2023 2022

Discount interest rate * 13% per annum 19% per annum
Staff turnover rate 20% per annum 17% per annum
Salary increment rate 10.0% 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 13% p.a ( 2022 - 19% 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 2023 2022
Assumption Increase / (decrease) Increase / (decrease)
of defined benefit obligation of defined benefit obligation
Rs. ‘000 Rs. ‘000
Sensitivity analysis to discount rate
1% increase in discount rate (1,192) (732)
1% decrease in discount rate 1,076 779
Sensitivity analysis to salary escalation rate
1% increase in salary escalation rate 1,158 909
1% decrease in salary escalation rate (1,286) (862)

106 CA Sri Lanka Integrated Annual Report 2023