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
Department of Business Administration
Leading University, Sylhet.

Date of Submission: August22, 2014.

Applicatio of AIS in Commercial Banks : 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.

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Letter of Transmittal
Date: : August 22, 2014.
To
Mr. Md.Rahimullah miah
Senior Lecturer
Department of Business Administration
Leading University, Sylhet.
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
Department of Business Administration
Leading University, Sylhet.

Applicatio of AIS in Commercial Banks : A NCC Bank View 3

Students 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
Department of Business Administration
Leading University, Sylhet.

Applicatio of AIS in Commercial Banks : A NCC Bank View 4

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.

Applicatio of AIS in Commercial Banks : A NCC Bank View 5

CHAPTER ONE: Introduction

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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.

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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 couldnt provide me
much time.
It is painful but true that they do not give financial or extra facilities for the student.

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 As being a student, it also created some problems as I was unable to acquire handson-experience in all the departments, due to the banks policy of maintaining secrecy
and also because I did not get the opportunity in all the departments.

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CHAPTER TWO : Literature Review

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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 organizations 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.

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CHAPTER FOUR : Application of AIS in NCCBL

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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.

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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 interbank 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.

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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 cards data collection,
L/C Openings data collection,
Monthly equipments data collection
Investment Applications data collection, etc.
4.4.2 Computerized:
Local remittance transfers data collection.
Foreign remittance transfers data collection.
Primary share request entrys data collection.
Performance reports data collection etc.
4.4.3 Combination of Both:
Account openings data collection,
Deposit Scheme opens data collection,
Cash receivers data collection,
Cash payments data collection,
Clearing of Cheques 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.
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So transaction processing system depends on the users 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 clients 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:

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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.
()Intranet:
In every branch of Banks 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.).
() Extranet:
Extranet are maintained for external user. They manage their extranet through a website. It
provides lots information for external user. Informations are updater through the employees
of IT department and informations are created and authenticated with help of the employees
of FAD department. Some informations 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:
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 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, multicurrency environment, enabling you to act in accordance with General Accepted Accounting
Principles (GAAP).

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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 upto-date data available.
System Security and the Sarbanes-Oxley Challenge:
Increased regulatory governance is a trend NCCBL must accept in todays 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.

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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.

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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.

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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.

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4.14 Transaction Cycle of NCCBL:

Expenditure
Cycle

Revenue
Cycle

Transaction
Cycle

Human
Resource
Cycle

Financial
Cycle

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:

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Bank
Customer slip
Statement and payment slip
Account Section of Bank

Clients
Payment
Book

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:

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NCCBL
Branch

ICCU

Work order

Officer &
Assistance

Goods
Invoices

Suppliers

Account Section
Payment

Record

General
Ledger &
Reporting
System

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:

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Cheques Issue
Employee

Credit

Bank

Accounts
Section
Record

Employees

General ledger
And Reporting
System

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 transferors account is debited as he receives money from the
banker and the transferees account is credited as he gives the money to the banker to lie in
his account.

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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
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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:
Applicatio of AIS in Commercial Banks : A NCC Bank View 28

 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.

Applicatio of AIS in Commercial Banks : A NCC Bank View 29

CHAPTER FIVE : Findings & Analysis

Applicatio of AIS in Commercial Banks : A NCC Bank View 30

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 clients 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 datas.
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 others 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 thats why data are separately saved in
several servers.
The features of this software are so modified thats 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.

Applicatio of AIS in Commercial Banks : A NCC Bank View 31

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:

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)

Components

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.

Applicatio of AIS in Commercial Banks : A NCC Bank View 32

Chapter Six : Recommendation & Conclusion

Applicatio of AIS in Commercial Banks : A NCC Bank View 33

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 .

Applicatio of AIS in Commercial Banks : A NCC Bank View 34

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.

Applicatio of AIS in Commercial Banks : A NCC Bank View 35

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 (9th Edition),
(2010), McGraw Hill.
www.bankinfobd.com

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