Application of AIS

“AISApplication in Commercial Bank: A NCC Bank View”

Submitted To

Mr. Md. Rahimullah Miah

Senior Lecturer

Department of Business Administration

Leading University, Sylhet.

Submitted By

Shamima Khan

ID NO.1421017020



Date of Submission: August22, 2014.

Applicatio of AIS in Commercial Bank’s : A NCC Bank View 1

Executive Summary

An accounting information system is generally a computer-based method for tracking

accounting activity in conjunction with information technology resources. A proper structural

Accounting Information System (AIS) is so important part of an organization. NCC Bank

Limited introduces AIS in their banking system few years ago, and the bank maintain

separate department for Accounting Information System (AIS). The name of their department

is FAD. For performing their activities they need the help of Information Technology

Department (IT). This department in maintain by the head office of the bank. Pubali Bank has

425 branches all over the nation. All of the branches are facilitating by online banking

system.

I was assigned to discuss the “Application of AIS in banks: A NCC Bank View”

My report contains six parts, Introduction, Literature Review, Overview of NCCBL,

Application of AIS in NCCBL, Findings & analysis, Recommendation & Conclusion. In my

assignment, I have mainly focused on the “Application AIS in NCC Bank”

I have seen that AIS are well designed in NCC Bank. NCC Bank integrated IT commenced

on September 23, 2008, with a view to streamline customer and banking service as well as

complying with the Bangladesh bank ICT guideline. To improve the skills and to make the

employees effective on AIS different programs are taking part every time. During my staying

in NCCBL,I experienced a lot of things from my assigned desks work. I hope that my report

will aid in understanding the Application of AIS practices of the NCC bank.


Letter of Transmittal

Date: : August 22, 2014.

To

Mr. Md.Rahimullah miah

Senior Lecturer



Subject: Submission of assignment on “AIS Application in Commercial Bank: A NCC

Bank View”.

Dear Sir,

I am pleased to say that I have completed my assignment. My assignment reveals a vivid

picturesque on the “AIS Application in Commercial Bank: A NCC Bank View”

It has been a huge learning experience for me and I have enjoyed preparing this report and

look forward to answering any question you have.

Sincerely yours

………………………………………………..

Shamima Khan

ID NO. 1421017020




Student’s Declaration

I, Shamima Khan, bearing ID NO-1421017020, hereby declare that the presented Assignment

title “AIS Application in Commercial Bank: A NCC bank view” is uniquely prepared by

me after completion of three months of work at theNational Credit and Commerce Bank

Limited, Sylhet Branch. No part of this report has been submitted for any degree, diploma,

and title of recognition before.

I also confirm that, the assignment is only prepared for my academic requirement not for any

other purpose. It should not be used with the interest of opposite party of National Credit and

Commerce Bank Limited.

---------------------------------

Shamima Khan

ID NO- 1421017020

MBA Program




Acknowledgement

First of all I must thank to almighty Allah for giving me the opportunity to have the chance to

complete the assignment successfully.

I wouldlike to express my respected appreciation to my teacher Mr.Md.Rahimullah

Miah,Senior Lecturer, Department of Business Administration, Leading University, Sylhet.

His constant guidance and advice played the pivotal role in making this assignment a success.

He always gave me his suggestions that were crucial in making this assignment as flawless as

possible.

Furthermore I would also be thankful to my friend with their help I was able to obtain my

assignment on time.


CHAPTER ONE: Introduction


1.1. Introduction

The development of a country depends on its economic growth. The higher the economic

growth, the higher the development of a country is possible. The advancement of banking

industry is required for the growth of economy. So it can be said that, banks play an

important role for the development and advancement of a country. It is needed to know about

the word “Bank”. Bank is a financial intermediary institution that collects deposits from the

people who have excess amount of money and provide credit to those who needs fund

through loans and purchase of securities.

Accounting information system represents as the language of banking sector because cost,

profits and return on investment are all accounting measurements and the purpose of

accounting is to provide information that is useful for decision making.

Accounting information System is the focal point of banking. There is not a chance to

disbelief that modern banking heavily relies on AIS. The study will look at the point how

NCCBL maintain their Application of Accounting Information as well as the practices of

Accounting Information System. This study is an attempt to the in-depth analysis of the

Accounting Information System practice in National Credit and Commerce Bank Ltd.

1.2 Rationale of the Study

Theoretical knowledge is not enough for a student. It is miles difference between

theoretical knowledge and practical field. So, this two should be synchronized. Another

purpose that may be is to know about the rules, regulations and environment of an

organization before getting a job. Such experience may facilitate a student to have a better

job.

1.3 Objective of the study:

To get an overall idea about the AIS.

To review the AIS application applied in NCCBL.

To measure the performance of AIS in NCCBL.

To suggest the better ways of enhancing the performance of the bank using AIS.

To know the accounting system of NCCBL.


1.4 Methodology of the Study

In order to make the report more meaningful and acceptable, two sources of data and

information have been used widely.

1.4.1 Primary Sources:

Observation of banking activities.

Conversation with the Branch officials of related desk.

Practical work exposures on different desks of the branch covered.

1.4.2 Secondary Sources:

From prior research report.

Annual report (2011-2012) of NCC Bank Limited.

Periodicals Published by Bangladesh Bank.

Published reading materials and books.

Different prospects and brochure published by the bank.

Related issues published in Newspapers and Internet.

Website of Bangladesh Bank, NCC Bank & other related organizations.

1.5 Limitations

The main constraints of the study are insufficiency of information, which was highly required

for the study.

Every organization has their own secrecy that is not revealed to others. While

collecting data through interviewing the employees, they did not disclose much

information for the sake of the confidentiality of the organization.

Bank policy was not disclosing some data and information for various reasons.

Another main reason the bank personnel were very busy, they couldn’t provide me

much time.

It is painful but true that they do not give financial or extra facilities for the student.


As being a student, it also created some problems as I was unable to acquire hands-

on-experience in all the departments, due to the bank’s policy of maintaining secrecy

and also because I did not get the opportunity in all the departments.


CHAPTER TWO : Literature Review


Initially, Accounting Information Systems were predominantly developed “in-house”

as legacy systems. Such solutions were difficult to develop and expensive to maintain. Today,

Accounting Information Systems are more commonly sold as pre built software packages

from vendors such as Microsoft, Sage Group, SAP and Oraclewhere it is configured and

customized to match the organization’s business processes. As the need for connectivity and

consolidation between other business systems increased, Accounting Information Systems

were merged with larger, more centralized systems known as enterprise resource

planning (ERP). Before, with separate applications to manage different business functions,

organizations had to develop complex interfaces for the systems to communicate with each

other. In ERP, a system such as Accounting Information System is built as a module

integrated into a suite of applications that can include manufacturing, supply chain, human

resources. These modules are integrated together and are able to access the same data and

execute complex business processes. With the ubiquity of ERP for businesses, the term

“Accounting Information System” has become much less about pure accounting (financial or

managerial) and more about tracking processes across all domains of business.


CHAPTER FOUR : Application of AIS in NCCBL


4.1 Concepts of AIS in NCCBL:

A proper structural Accounting Information System (AIS) is so important part of an

organization. NCCBL maintain separate department for Accounting Information System

(AIS). The name of their department is FAD. For performing their activities they need the

help of Information Technology Department (IT). IT department help them by providing

computerized and technological support. FAD work centrally for connecting all branches of

NCCBL. They maintain a distributed information system. Every branch maintain separate

server for updating information. FAD collects that information via different software and

manually generates information as they need. But some information is collected through Fax,

Phone and Letter because of lack of their technological opportunity. On the other hand

sometime a branch collects some information from FAD by the same way but there are some

restrictions for providing information to the user.

After collecting the information they manually generate information. That information is in

printed copy. They prepared two copy of data and then one copy of data are send to the Audit

Committee and others are preserved for evidence. After auditing the data the audit committee

make information themselves and again sends it to the FAD division. Then they analysis the

information and publish or provide the information to the user. By this way the FAD works

and maintains all accounting rules & regulation with help of information technology. In the

view of that it is easy to say that Accounting Information System is totally mixed with their

system and tiring to speed up their system for achieving the success. So it can be said that

they maintain their AIS in a proper structural way within a separate department.

4.2 Accounting Information System in the NCCBL activity:

From exercising their main functions banks generate extremely useful accounting

information, both for the bank management and for the clientele. These functions or

operations, traditional for the banks, confirmed by law, generators of accounting information,

refer mainly to:

Accepting deposits from clients,

Issue and management of payment instruments and credit,

Payments,

Fund transfers,

Transactions in the clients’ accounts,

Mandate operations, etc.


The classification of bank operations in active and passive depending on the way they are

found in the bank balance sheet, also underline the role and importance of accounting

information system in the whole bank activity. Active bank operations generate accounting

information regarding the placement of bank resources (in credits, placements on the inter-

bank market, etc). Passive bank operations generate accounting information system regarding

the attraction of resources by the bank (own capital, deposits from clients, etc.)

NCCBL accounting information system allow the speculate upon some attractive business

opportunities connected to giving credits, guarantees and other facilities in favor of

performing clients. Also the bank accounting information system help banks in attracting

resources in the volume, structure and maturities(terms) meant to satisfy the opportunities

offered by clients.

4.3 Sources of NCCBL AIS:

The main sources generating accounting information in bank activity are:

Clientele accounts, which can be: availabilities in bank accounts, current accounts and

stock accounts, or credit accounts. In these accounts the payment instruments,

encashment, card operations, etc are registered.

Bank entity accounts, which refer especially to: cash accounts, current accounts

at the NCCBL, inter-banking settlement accounts, income and spending accounts of

the bank, etc.

Accounts outside the bank cash statement, which are reflected into: engaged

guarantee accords, engagements unfolding in credits, guarantees related to credits,

claims from current assets and followed afterwards.

Bank computerized programs which manage both accounting data and statistical

data, bank management, etc.

In NCCBL the main sources for collecting accounting information system come from

the front office, clientele operations and inter- and intra- banking operations.

The types of accounting information system in bank activity refer to:

The value of account surplus stock (initial and final), debt and creditor turnover for these

accounts, the number of registered account operations and their value, the exchange counter

position (equivalent in lei for the currency accounts surplus stock), the quantitative

structure of accounting operations, averages, marginal indices and evolution of bank indices.


All these types of accounting information may exist in raw or advanced form with the aid of

the bank computerized programs.

4.4 Operational system of AIS in NCCBL:

In present days all the private commercial banks make their banking operation through

combination of manual and computerized system. Here some operational activities of FAD,

that how they collect the data are given below.

4.4.1Manual :

Payment order(PO)’s data collection,

Demand Draft(DD) ’s data collection,

VISA card’s data collection,

L/C Opening’s data collection,

Monthly equipment’s data collection

Investment Application’s data collection, etc.

4.4.2 Computerized:

Local remittance transfer’s data collection.

Foreign remittance transfer’s data collection.

Primary share request entry’s data collection.

Performance report’s data collection etc.

4.4.3 Combination of Both:

Account opening’s data collection,

Deposit Scheme open’s data collection,

Cash receiver’s data collection,

Cash payment’s data collection,

Clearing of Cheque’s data collection, etc.

Here in this report computerized accounting information system is mainly focused.

4.5 Maintenance of computer based transaction in NCCBL:

Transaction processing system is a part of Accounting Information System. Mainly two types

of transaction are held in NCCBL. Transaction varies department to department as their need.


So transaction processing system depends on the user’s activities as it demanded. Here I

describe them in below.

Software Base:

They have some activities that are maintain through software. Those are given below.

Entry of account opening information,

Profit distribution,

Collection of Deposit,

Payment of Salary,

Internal expenses listing,

Investment activities listing, etc.

Example: In banking salary structure are predefined, when salary of employee are occurred

than software send those salaries from Salary Account to all Employees individual account.

Like this way software base transaction occurs.

Web Base:

They have some activities that are maintain through web. Those are given below.

Online Cash Transfer,

Payment of Cash,

Collection of Cash,

Clearing of Cheque,

SWIFT,

Letter of Credit authentication,

Currency selling and purchasing,

Branch to Branch Internal Transaction etc.

Example: Payment of cash is a web based transaction, because a client can draw his/her

money from any branch in our country. For that reason employee of cash counter need to

verify client’s signature and photos as on requirement so he entered on web and collect data

from the server by querying his/her account number.

Some important information about this web-base transaction is given below:


When the data are entered in computer software then the data are uploaded over a network.

They have both Intranet and Extranet network. In below the activities of those networks are

explained with example.

(і)Intranet:

In every branch of Bank’s have several server. When certified data are uploaded in software

then the data are stored in server of its branch. Several branches have different code for them

and for server. When an employee need to know about specific information about a client

then he access the server and find the information. So it is clear that Customized software is

the media that can connect every server to each other and store the data in server.

Example: When a cash transaction occurs then few activities are happened with software.

First of all the clients account number are entered in the software, then a signature

verification command are pressed then software collect the data automatically and show it to

the employee. After that his required amount are deducted from his balance and again

software saved it to server with proper information (like time of the transaction, employee

code and etc.).

(іі) Extranet:

Extranet are maintained for external user. They manage their extranet through a website. It

provides lots information for external user. Information’s are updater through the employees

of IT department and information’s are created and authenticated with help of the employees

of FAD department. Some information’s about the extranet are given in below.

4.6 Main software used for maintaining AIS in NCCBL:

Software is one of the most important parts of AIS. They use two types of software. Firstly

they use self made Software named Bank Star 2000 and Micro Banker (I Flax) .On the

other side they use Microsoft Office and Flora Banking for performing other activities.

Here in below I describe about customized Software.

Activities:

Banking Transaction are held through it like cash payment, cash receive etc,

It helps to input the Clients Information in server.

It process bank statement of clients.

It helps the authorized user to send or receive data from another user.

Updating Procedures:


Information & News uploaded by IT department.

Coding & structure changed by several customized software.

Period of update: As on demand

Activities of network:

Keep alive and make relation between the server and website.

Connect each server with every server for transferring dates.

It helps FAD to collect daily information from several servers.

It helps to provide information to internal & external users.

4.7 Users of bank accounting information System:

Internal users respectively: Bank clients and stockholders, front office, middle

office and back office employees, bank managers;

External users respectively: Client business partners, suppliers and their clients,

financial and fiscal institutions, insurance companies, other banks.

All these external users take accounting information from the clientele accounts, made

available to them by the clients. The banks must respect the confidentiality principle for the

operations in clientele accounts and for this reason they usually give accounting information

only to internal users.

In the analysis of accounting information system, of its accuracy and importance for

the bank stockholders, the issue of bank accounting system transparency is interesting

to approach.

Generally in the banking system all over the world the transparency of bank accounting

systems is important for the identification of income sources and loss sources within a bank.

4.8 NCCBL Softer Integrated Accounting:

Multi-Company, Multi-Currency, and Multi-Rollup:

The Integrated Accounting module is an online, real time general ledger and financial

reporting system. There are also accounts payable and accounts receivable subsystems. The

system allows you to maintain several corporate structures within a multi-company, multi-

currency environment, enabling you to act in accordance with General Accepted Accounting

Principles (GAAP).


The Integrated Accounting module is table-driven with parameters that can be selected by the

user. The user defines the chart of accounts, report structures, closing periods, year-ends, and

more. The Integrated Accounting module is specifically designed to interface seamlessly with

the other components of the Portfolio Plus system. This is achieved through automatic journal

entries produced by each subsystem (in real time) via a unique user-controlled interface.

Third Party System Integration:

The Integrated Accounting module can be used as a stand-alone system or a custom interface

can be developed to provide integration with NCCBL legacy accounting information system.

Real Time:

All financial entries are created in real time, ensuring NCCBL is working with the most up-

to-date data available.

System Security and the Sarbanes-Oxley Challenge:

Increased regulatory governance is a trend NCCBL must accept in today’s financial industry.

Luckily, Portfolio Plus can help. With the security system built into Portfolio Plus bank can

reflect the authority of each user on the system and monitor any attempts to breach this

security.

Audit Trail and Compliance:

Strict regulatory requirements make it imperative for financial institutions to maintain

comprehensive records. As such, SIT has embedded technology into each Portfolio Plus

module to closely track and monitor all activity within the system. The Portfolio Plus

Accounting Information System enables NCCBL to act in accordance with GAAP reporting

requirements.

Flexible and User-Definable:

Virtually every aspect of the Portfolio Plus Accounting module is user-definable including:

Fiscal periods.

GL accounts.

Report roll-ups.

Security settings.


Fiscal Period:

Year end dates and fiscal periods are user-defined.

The General Ledger:

The general ledger is at the core of account processing and information systems in banking.

The general ledger is the record accessed to perform account transactions. It records every

transaction, which interfaces with a designation of accounts .NCCBL general ledger can be

slightly different from modern industry general ledgers because of certain compliance rules

set forth by the Bangladesh Bank (BB). NCCBL general ledger systems operate on mid-range

software, which can be turnkey software--out of the box software customized for banking

industry applications.

Named as desired.

Numbered as required.

Posting or non-posting (summary only).

Accounts Payable and Accounts Receivable:

The Integrated Accounting module includes both accounts payable and accounts receivable

functionality. The CIF-centric design enables AR and AP contact information to be input

once and reused for future transactions.

Accounts payable and accounts receivable features include:

Ability to enter a payable for immediate payment or at a later date (in batch or by

vendor)

Payables can be settled by computer cheque, manual cheque, or direct deposit into a

retail account (Portfolio Plus Retail Banking module required)

When cheques are created, one cheque is produced for each vendor showing the

invoices for which the payment is being made.

Ability to do bank reconciliation, query cheque information, cheque registers, vendor

payable information, and reports, depending on user selection and criteria

A receivable may be entered as a receipt being collected immediately, creating journal

entries for distribution and a bank deposit slip record, or as a receivable to be

collected at a later date

Full and partial payments may be received.


Journal Entrie:

All entries from the subsystems (and any manual journals) are kept unposted until the posting

program is run. The posting process can be run manually at any time or run as a scheduled

job within the nightly queue. This is completely at the discretion of NCCBL accounting

department. These entries may be printed or viewed on screen.

Manual Journal Transactions:

Using Manual Journal Transactions users can:

Provision for authorized personnel to adjust previous periods.

Data is validated to ensure that accounts, cost centers, and companies are valid and

that entries are balanced.

Journal numbers are automatically assigned.

Journal entries may be posted to the General Ledger accounts immediately or left for

bulk posting at a later time.

Automatic Journal Transactions:

Journal entries for a specific event are user-definable and can be configured as follows:

Bank can set and change the GL Account numbers associated with a transaction

created by a subsystem.

An identification name is associated with the transaction and a transaction can be

turned off so as not to post.

The account number, default cost centre, and sign (+,-) can be assigned

If an automatic transaction is created but no accounts are associated with it, the

system will default to the suspense debit and credit accounts that are set in the

company file for posting.

4.10 Loan Accounting Applications:

Banks make the majority of their money through loans and investments. Through loan

accounting software, bank personnel can process the forms and paperwork needed to make a

decision on a customer's credit standing. The managerial side of a loan accounting

application is managers can access data to examine the bank loan portfolio, generate

compliance checks for auditors and track loan loss reserve accounts. Loan origination

software can interface with an accounting information system through most PC-based

systems.


4.11 Mortgage Banking Applications:

For banks in the mortgage industry, mortgage bank application modules create and maintain

information according to mortgage loans provide by banks to its customers. The mortgage

information system generates customer statements, tax statements for federal and state tax

offices, and creates an escrow account for mortgages on the banks portfolio. On the general

ledger, mortgage bank accounts consist of several sub-account layers reflecting taxes, actual

value of the mortgage, assessed value of the mortgage and other variables.

4.12 Customer Account Applications:

Customer account applications provide unique primary key identifiers to link customer

information to an account number assigned by the information system during a creation of the

account. The customer account is maintained on the system and referenced by account

number, which is held in a field on the general ledger. The customer account number is the

link for customers to interact with online and offline banking system applications. Customer

account information is also the basis for transaction exception reporting for various customer

account issues.

4.13 Internet Banking Applications:

The latest evolution in banking information systems are web-based applications that support

Internet banking. Internet banking programs interface with accounting information system

through a web server or portal with the website or page performing the role as a template or

"point of access." Through secure web-servers, customers can perform actions, which can

affect, update or change general ledger status. Management analyzes reports pertaining to

Internet banking, such as how many customers are using the Internet for deposits, transfers

and access other banking products.


Expenditure Cycle

Human Resource Cycle

Financial Cycle

RevenueCycle

Transaction Cycle

4.14 Transaction Cycle of NCCBL:

4.1Figure: Transaction Cycle of NCCBL

Revenue Cycle at NCCBL:

NCCBL is a financial institution which provides monetary service to the customer. Bank has

a payment book for the clients where every page has 2 parts, one for depositor or client and

another for bank. Several kind of charge or deposit and collection customer has to collect

their payment slip from respective desk or officer. FAD section collects the slip and checks

transaction and record it to general ledger and reporting system. Revenue cycle of NCCBL is

shown in a diagram billow:


Bank

Clients

Customer slip

PaymentBook

Account Section of Bank

Statement and payment slip

General Ledger & reporting system

4.2Figure Revenue Cycle at NCCBL

Expenditure Cycle of NCCBL:

Within the bank information flows to the expenditure cycle from the various section about the

need to purchase goods, materials and various type of convense .Once the goods and

materials arrive, notification of their receipt flows back to those source from to expenditure

cycle. In addition management must monitor and evaluate the efficiency and effectiveness of

expenditure cycle process. That requires easy access to detailed data about the resources

employed in the expenditure cycle, the events that affect those resources, and the agents who

participate in those events.

In NCCBL Officers and assistance show the various needs to the manager and he approves

the voucher for special purpose. The account section records it to the general ledger and

reporting system. Expenditure cycle of NCCBL in shows the diagram bellow:


ICCUNCCBL Branch

Officer & Assistance

Suppliers

Work orderGoods

Invoices

Account Section

Payment

General Ledger & Reporting System

Record

4.3Figure Expenditure Cycle of NCCBL

Human Resource Cycle of NCCBL:

The Human Resource Cycle associated with effectively managing the employee. It is the

recurring set of business activities and related data processing operations associated with

effectively managing the employee workforce. The payroll system must be designed to meet

Government and Bangladesh Bank regulation aswell as managements information needs.

Incomplete or erroneous payroll records result impair decision making. Thus the design of an

efficient and effective payroll system is vital.

Cheques are the payroll systems principal output. Employees receive individual pay cheques

in compensation for their services. A payroll cheque is sent to the bank to transfer fund from

the bank regular accounts to its payroll account. Institution deduct the amount of tax and

provident fund from the compensation of the employee. Then account section records it to the

general ledger and reporting system. The Human resource Cycle is shown in a diagram

below:


Employee Bank AccountsSection

Credit

Record

General ledger And Reporting System

Employees

4.4Figure Human resource Cycle of NCCBL

Modern banking transaction is done in three ways. They are as follows: a) Cash transaction b)

Clearing c) Transfer.

a) Cash Transaction

When the transaction is made by cash they are called cash transaction. Cash is an asset of the

bank. That is why when the bank receives cash it is debited and corresponding credit is made

either by creating liability or a revenue etc.

b) Clearing

A customer of the bank may receive checks from others or issue a check to a person who may

place the check in his account with other bank. In this case the customers account is credited

or debited respectively and a corresponding advice is issued to the clearinghouse to clear the

checks.

c) Transfer

The transfer of an amount from one account to another dose not effect the cash balance until

cash is withdrawn by the transferor’s account is debited as he receives money from the

banker and the transferee’s account is credited as he gives the money to the banker to lie in

his account.


Cheques Issue

4.16 Daily Activities Report

Every branch has to prepare a daily activities report for every day. The Daily activities shows

the daily transaction profile, Daily current balance of individual account and individual head

wise posting.

4.17 Statement of Affairs

The statement of affairs is the statement of balance of general ledger Accounts. This

statement shows the daily asset and liability position of the bank. Every bank has to furnish

this statement to the head office to inform their asset and liability position. The statement

includes the general ledger code, general ledger description, detail balance and group

balance. The balance of the different accounts must agree with the balances in the registers

kept manually.

4.18 Schedule Bank Statistics (SBS-1, 2&3) Statement

As per requirement of Bangladesh Bank each And every branch needs to provide statement of

assets and liabilities in prescribed format. These formats are in printed and every branch must

comply with these formats.

SBS-1 is the monthly statement of assets and liabilities. This statement provides information

regarding sector wise deposits collection & loans and advances sanction.

SBS-2&3 are quarterly statement of deposits and advances. Each and every bank provides

standing of deposit and advances in every three months to Bangladesh Bank.

In SBS-2 the branch supplies information regarding quarterly deposits, foreign currency

deposits, wage earners deposits etc. In SBS-3 provides data about sector wise advance

sanctioned by the branch during the last quarter.

4.19 Notes of Financial Statements of Every Year

a) Basic of Accounting

The financial statement of the bank is prepared according to the Bank companies Act.1991

and Bangladesh Accounting Standards on a going concern basis under historical cost

convention.

b) Consolidation

All the financial statements is prepared by he records of the statement of affairs, income and

expenditure statement of the branch.

c) Investment


Investment in treasury bills is shown at face value, Prize bond at cost price and shares at cost

or market price which ever is lower. Interest on Investment in Government and other trust

securities, debentures and bonds etc. is accounted for as income on accrual basis. Interest is

calculated on daily product basis.

d) Loans and Advances

Normally loans and advances are stated at gross value. Provision for loan and advances is

made on basis of period end review by the management and of instructions contained in

Bangladesh Bank.

e) Fixed asset and Depreciation

Usually Fixed assets are stated at cost less accumulated depreciation. Depreciation is charged

at the annual rates prescribed by Bangladesh Bank as noted bellow:

Furniture & Fixture:10%-20%, Machinery and Equipment-20% & Vehicles-20%.

Depreciation at applicable rates is charged on additions to fixed assets as well as on sale of

any item on the basis of number of day in use of the concerned asset.

f) Cash Flow Statement

Cash flow statement is prepared principally in accordance with ISA. Cash flow statement and

the cash flow form the opening activities have been presented under direct method as

prescribed by the securities and exchange rules 1987.

g) Off Balance Sheet Item

Usually under general banking transactions liabilities against acceptance, endorsement and

other obligations and bill against which acceptance is given and claim exits there against is

shown as off balance sheet item.

h) Foreign Currency Transactions

Transactions in foreign currencies are converted into equivalent taka currency using the

ruling exchange rates on the dates of such transaction. Assets and liabilities as at year-end in

foreign currencies are translated into taka currency at the prevailing selling and buying rates

of the concerned foreign currencies of that day. The difference arising from the conversion is

charged/ credited to the profit and loss account.

4.20 Reports

The Integrated Accounting module enables to schedule recurring reports at any frequency

(i.e. monthly, weekly, daily, etc.). Reports can be viewed on screen, saved as a file, or sent to

print. Bank can easily create management reports, diagnostic reports, and customized roll-up

reports including:


Income Statement Reports

Trial Balance Reports

Balance Sheet Reports

Audit Trail Reports

Account Roll-up Reports

Cost Centre Roll-up Reports

The system also enables to perform comparative reporting and analysis, such as: This Period

vs. Last Period, This Year vs. Last Year, and This Month vs. Last Month.


CHAPTER FIVE : Findings & Analysis


Findings:

This study has focused on the application of accounting information system in NCCBL. The

main findings of the study are given in below.

The Banks maintain both manual and computerized system for performing the daily

operations of AIS.

The computerized transaction processing system is categorized into software and web

based system.

They maintain website for their internal and external user for performing transaction

and providing lots of information to them.

The client’s data are processed in both batch and real time processing system.

In NCCBL, segregation of duties and documentation control techniques are used for

performing internal control system.

Daily, monthly, quarterly, yearly and performance report are prepared for internal and

external reporting.

NCCBL maintain a stable organizational structure, a complicated manual and

computerized file structure, easy data recovery system, costly data documentation &

storing system. Their AIS can also provide relevant and reliable data’s.

NCCBL has incorporated online banking system in their operation with Bank Star

2000, Micro Banker (I Flax), Florabanking software. All of the branches are now

connected with this online banking system.

Cash deposit in other’s account at any branch of the bank irrespective of the location.

Transfer of money from clients account with any branch of the bank.

It is a Decentralized or Distributed System that’s why data are separately saved in

several servers.

The features of this software are so modified that’s why it is quite easy transaction

Process in a short time.

It uses real time processing system that is easy for updating information.

The main problem is that the data are in decentralized, if one server is disable then

data ware lost from the server and if connecting server are disable than the total

system will disable.

It needs much time to collect information from outside of the city, because data

transfer speed depends on distance between data sender and receiver.

Low Security for data hacking, error and misrepresentation of data.


Analysis :

Effectiveness of AIS for providing Information in NCCBL:The respondents were asked

about the effectiveness of AIS for providing information in their organization.

Satisfaction Level of Employees using AIS:

Components

Respondent in Percentage (Frequency)

Satisfied Neutral Dissatisfied

Using software in reporting 17.6% (3) 35.3% (6) 47.1% (8)

GAAP 64.7% (11) 23.5% (4) 11.8% (2)

Internal Controlling System 17.6% (3) 58.8% (10) 23.5% (4)

Transaction Cycle (Period) 58.8% (10) 23.5% (4) 17.6% (3)

Table-1: Satisfaction level of employees using AIS.

From the above observation it is found that:

In case of using software in reporting, 17.6% respondents are satisfied, 35.3%

respondents are neutral & 47.1% respondent are dissatisfied.

In case of maintaining GAAP, 64.7% respondents are satisfied, 23.5% respondents

are neutral & 11.8% respondents are dissatisfied.

In case of maintaining internal controlling system, 17.6% respondents are satisfied,

58.8% respondents are neutral & 23.5% respondents are dissatisfied.

In case of maintaining transaction cycle, 58.8% respondents are satisfied, 23.5%

respondents are neutral & 17.6% respondents are dissatisfied.


Chapter Six : Recommendation & Conclusion


Recommendation:

Long term training very much required for the bank officials for effortlessly operates

AIS application.

Computerized banking system and latest communication device are the most

important elements for this century. So, for the sound and stable banking operation,

NCCBL has to alternative but the modernization.

NCCBL maintain a fixed organizational and data structure which can create problem

for new employee to cope up with the existing system.

They use decentralized web based transaction and data storing system, which create

problem for financial administration division (FAD) for collecting data, so they

should use centralized system for increasing the effectiveness of AIS.

The main software different customized operating software which is not effective

enough for generating report or information, so they should develop new software for

batter performance .

They should give more emphasize on their manual (mail & fax) data transferring

system.

They should increase more safety for protecting data hacking, error and misuse of

data.

Bank may use a customized option regarding the sanction of loans, such as any

software that may properly check proposal and other related document.

NCCBL may follow distributed system that helps to minimize the risk of data loss.

Pertain to the maintenance of record that in reasonable detail accurately and fairly

reflect the transactions and disposition of the assets of the registrant .


Conclusion:

Bank play very important role in the wealth of the nation. The health of the economy is

closely related to the soundness of its banking system. National Credit and Commerce Bank

Limited, Sylhet Branch providing services to its customer from very beginning of its

establishment.

My report is mainly focus on Accounting Information system in National credit and

Commerce Bank Limited.

The accounting information system of NCCBL is in the emergent stage. They have separate

AIS department. From the above discussions, it may conclude that the banks made their

banking operation through combination of both manual and computerized system. They use

computerized system generally for operating, data transferring and storing purposes. Thought

they maintain a web-site, but all the transactions are not web based. They regularly prepare

financial statements for evaluation of performance and for external reporting and

performance evaluation they prepared financial statements and published annually. The users

of AIS were satisfied about their AIS and internal control system. They record and collected

their source document through computer. They think their AIS are cost beneficial and

flexible. NCCBL use real time & batch processing for updating their information. NCCBL

should give more emphasis on internal control system, safeguarding assets and information

generation or reporting system. In comparing with the developed foreign banking sector some

banks should put more highlighting on web based transaction and individual online banking

system.


Reference:

Annual Report of Financial Year 2011-2012, NCC Bank Limited

www.bangladesh-bank.org

E-learning manual and UBS Banking System Software

Other short notes provided by the bank in different times.

Official Web Page. NCC Bank Ltd. Dhaka. Retrieved from <www.nccbank.com.bd>.

Marshall B. Romney, Paul John Steinbasrt, “Accounting Information System”

(10th Edition) (February 2006), Pearson Prentice – Hill.

Paul Bocij, Andrew Greasley, Simon Hickie, “Business information system:

technology, development and management” (1st Edition),(2009), Pearson Education,

Ltd.

BRIAN Williams, Stacey C. Sawyer, “Using Information Technology” (9 th Edition),

(2010), McGraw Hill.

www.bankinfobd.com


Documents

Application of AIS