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The prime objective of this report is to analyze the A study on the Maintenance of Accounting Information System At
Private Banking Sectors in Bangladesh
Specific objectives:
1.
2.
To know about the system mainly Private Banking Sectors follow in the operation of AIS.
3.
4.
5.
To be acquainted with the main software they use for maintaining AIS.
6.
7.
8.
9.
10.
11. To identify the opinion of internal users of AIS in Private Banking Sectors.
12. To identify the problems in the AIS, if any.
13. To recommend a guideline for improving AIS practices in Private Banking Sectors.
To prepare this report all the necessary information collected from both primary and secondary sources of data.
i.
For preparing this report, data was collected from different primary sources. Different questions asked to IT officer
and FAD officer to collect the required data. Those data are collected through face to conversation and
observation.
ii.
Internal: Annual Reports of all private banks, Other published documents of the bank, banks Website.
External: Books, Articles and Website.
Primary Data are collected from the AIS and IT department. I collect those data through an informal questionnaire.
Different people from FAD & IT department and Branch were asked for their opinion about Software,
Organizational structure and some more information about the overall system. I use different method for gathering
primary data like observation method, face to face discussion method and questionnaire survey.
ii.
Secondary Data can be found inside the company, on the internet, any published book for external user. For this
report I collect secondary data from internet, book and Journals.
Sampling Plan:
i.
Target Population: For the questionnaire target population was the internal user of AIS in
local branch and for observation and face to face discussion target population was the employee of FAD & IT
departments.
ii.
iii.
iv.
Since the bank personnel were very busy on their personal activities, they could not provide enough time to me to discus my
subject broadly.
Lack of opportunity to visit IT & FAD department more than one time.
The website of banks are not that much rich with data.
The main constrain of the study was in sufficiency of information, which was required for the study. There are various
information the bank employee cant provide due to security and other corporate obligations.
Due to time limitation many of the aspects could not be discussed in the present report. Learning all about within just 3 week
is really tough.
We have some error while analyzing the data and preparing the report.
With a vision to make a poverty free Bangladesh, some distinguished entrepreneurs of the country decided to
establish a commercial bank. The result was Bank Asia Limited. It was the 27th day of November, 1999 when the
bank started to function. As a commercial bank it announced its mission to provide technology based, innovative,
and quality services for the clients at a minimum cost.
AB Bank Limited
AB Bank Limited is the pioneer in commercial banking under private ownership in Bangladesh. It started functioning
as Arab Bangladesh Bank Ltd. on 12 April, 1982. To be the trendsetter for innovative banking with excellence and
perfection was pronounced as the banks vision. Side by side it spoke out about its mission, To be the best
performing bank in the country. Since inception AB Bank Limited has spread over the country through 82 branches
at all economically potential locations.
To identify customers needs & monitor their perception towards meeting those requirements.
To review & updates policies, procedures & practices to enhance the ability to extend better services to the
customers.
To train & develop all employees & provide them adequate resources so that the customers needs are
reasonably addressed.
To cultivate a congenial working environment.
To diversify portfolio both the retail & wholesale markets.
Common Departmental Structure of Private Banks in Bangladesh
All branches of Private Banks in Bangladesh are divided into three departments. Those are defining below with
their activities and procedures
Department of General Banking
Department of Investment
Department of Foreign Exchange
General Banking Department:
General banking department is one of the most important departments of all private Bank. Basically banks
provides the main services to the customer through this department. In general this section has some common
services for customers that are given below.
Account Opening
Issuance of Cheque
Receiving Cheques for Clearing, Transport, and Dispatch
Issuance of PO (Pay Order), DD (Demand Draft), etc.
Opening and Maintaining of MTDR and other Scheme Deposits
Fund Transfer
Investment Department:
Banking business consists of borrowing and lending. Bank acts as an intermediary between surplus and deficit
economic units. Thus a banker is a dealer in money and credit. Banks accept deposit from large number of
customers and then lend a major portion of the accumulated money to those who wish to borrow. In this process
banks secure reasonable return to the savers, make funds available to the borrowers at a cost and earn a profit
after covering the cost of funds. For maintaining this mechanism, they do some activities those are given in below.
Prepare the application form to provide loan
Preparing Refund Statements
Preparing Investment Proposal and Statement
Foreign Exchange Department
In this department the job were more-or-less based on document verification by getting true and perfect
information. The authorized person just changes the numbers & other required things from the format and
prepares documents for the customers. The foreign exchange department consists of three sections. They are:
Import section
Export section
Foreign remittance section
Task of this Division:
Issue L/C.
2.
3.
ATM Services
4.
Signature Verification
VISA Card
2.
Relevant:
Information is relevant if it reduces uncertainty decision makers ability to make predictions, or confirms or corrects
their prior expectations.
2.
Reliable:
Information is reliable if it is free from error or bias and accurately represents the events or activities of the
organizations.
3.
Complete:
Information is complete if it does not omit important aspects of the underlying events or activities that it measures.
4.
Timely:
Understandable:
Verifiable:
Information is verifiable if two knowledgeable people acting independently would each produce the same
information.
7.
Accessible:
Information is accessible if it is available to users when they need it and in a format they can use.
Component of Accounting Information System (AIS):
AIS cant do anythings without any its users. So the AIS and the people who use it must still collect, enter,
process, store, and report data and information. The paper and pencil or the computer hardware and software are
merely the tools used to produce the information.
Accounting information systems are composed of six main components:
1.
1.
People: users who operate the systems and perform various functions.
2.
2.
Procedures and instructions: both manual and automated, processes involved in collecting, processing, managing
3.
Data: data that is related to the organization and its business processes
4.
4.
5.
5.
Information technology infrastructure: The actual physical devices(computer, peripheral devices, and network
communication devices)and systems that allows the AIS to operate and perform its functions(to collect, store, process, and
transmit data and information)
6.
6.
Internal controls and security measures: That safeguards or secures the data in the AIS.
I.
Flexibility means that the system should be so much flexible that it can be changed when necessary. Flexibility
helps the organization to perform its task easily and quickly as they want.
Organizational Structure should flexible for improving their activities in different situation.
Organizational Data structure should be very easy which will help the employee to cope up with the system
easily for the long run success.
Data Recovery system must be simple which will help the employee to recover the lost data or previous
data.
II.
Cost beneficial means the benefits of information must outweigh the cost of providing it. Cost effectiveness
indicates the minimizing process of cost which helps to maximize the profit of an organization.
Data Documentation system is the process how data are maintained and stoke for future.
Data Storing should be less costly because it reduces the level of profit.
Maintenance of Data Structure is the most costly activities in every organization so they should maintain is
chiefly.
1.
III.
Some time a success of a company depends on the usefulness of AIS. If AIS provides more useful data or
information with a proper way & also in time, than it will help the organization to achieve the goal easily. Here in
below I provide some information about usefulness of AIS in Private banking sector.
Relevant data means if data reduces uncertainty decision makers ability to make predictions, or confirms or
corrects their prior expectations as they demand.
Reliability of data means if it is free from error or bias and accurately represents the events or activities of the
organizations.
Accuracy of data means if it is free from error or bias and misrepresentation.
Timely data means if it collected and provided in time for decision makers to make decisions and for users
generating information.
Concepts of AIS among Private Banks in Bangladesh:
A proper structural Accounting Information System (AIS) is so important part of an organization. All private banks
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 SJIBL.
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.
Some information about FAD department is given below.
Name of the department: Financial Administration Division (FAD)
Activities of the Department:
Data collection
Data maintenance
Data management
Data control
Information generation
Strength of the Department:
Experienced employee
Stable structure
Good internal controlling system
Maintain GAAP
Internal Sharia audit committee
Limitation of the Department:
It maintains distributed data structure which increases the risk of data hacking and data lost.
It maintains both manually (printed) and computerized system that why it is too costly for them.
Some time data are collected manually (through mail, messenger etc) so false data can make error in report.
They process data manually (on hand calculative processing) thats why it needs much time for preparing report
for user.
Future Plan: Give a new technological structure, more features and services in banking sector.
Operational system of AIS in Private Banking Sector:
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.
Manual :
Computerized:
Combination of Both:
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.
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.
Types of software used in Private Banking Sector:
A company can use many different strategies to obtain new AIS. They can purchase software (local and foreign)
or they can use their information system departments to develop their requirements are unique or they can hire an
outstanding company to handle data processing actives. In our country very few companies softwares are
developed by local and foreign companies. Many Software are used in every banks, which are categories in
below.
v Self: Most of Banks build their self software for maintaining their transaction and data transfer process within
their organization. Names of self build software are given billow.
Foreign: They also use some foreign software for preparing report or document and for preserved it in server.
Names of foreign software are given billow.
Local: Some local software are used for helping the daily activities. Names of local software are given billow.
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.
Advantages:
It is a Decentralized or Distributed System thats why data are separately saved in several servers.
It is a distributed system that helps to minimize the risk of data loss
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.
Problems:
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.
It has no structured auto data processing opportunity so that it needs to do manually (like voucher processing, profit
distribution on FDS).
Now a days internet is expanded its dimension all over the world and connected people over the world. So
internet or websites are an essential part of an organization. They maintain Website for their user and they also
maintain web base transaction in all over the country. This Website maintain through Information Technology (IT)
department.
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.
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.
Updating Procedures:
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.
L/C opening and closing needs a certain period of time for that it is under BPS,
Short or long term loan facilities are periodic system so that is the reason for taking it under the BPS,
After a certain period profit will generated and distribution thats why it is under BPS,
Real Time processing is refers the immediately recording of data. Here they process data which comes on their
hand first.
Cash deposit,
Withdraw of deposit,
Opening of new account,
Statement of account,
Daily: Most of the activities are performed as daily basis{like cash transaction, every day expanse(e.g. entertainment of
client, fuel for generator), online transaction}
External reporting:
The respondents were asked about the effectiveness of AIS for providing information in their organization.
Graphical Presentation
Comments:
From the observation it is found that, 23.5%(4) respondents were disagree and 23.5%(4) of respondents were
neutral, 35.3%(6) respondents were agree and rest of 17.6%(3) respondents were strongly agree about the
effectiveness of accounting information system for providing information to internal users.
Satisfaction Level of AIS
Components
Respondent in Percentage(frequency)
Satisfied
Neutral
Dissatisfied
17.6% (3)
35.3% (6)
47.1% (8)
GAAP
64.7% (11)
23.5% (4)
11.8% (2)
17.6% (3)
58.8% (10)
23.5% (4)
Transaction Cycle(Period)
58.8% (10)
23.5% (4)
17.6% (3)
They maintain separate department for Accounting Information System (AIS). The name of their department is FAD. FAD has
some problem like, distributed data structure, manual data processing and risk of security. But it has also some strength like,
good internal controlling system, internal audit committee and stable org. structure.
2.
The Banks maintain both manual and computerized system for performing the daily operations of AIS.
3.
The computerized transaction processing system is categorized into software and web based system.
4.
In Private Banking, they use self developed software for performing transaction and they also use local and foreign software
for preparing report and it also helps to performing other activities.
5.
They use many different main software that use to performing transactional activities and transferring data. It has some
advantage like, decentralized system, minimum risk of data lost and speedy transaction system. And the negative side is it
needs much time to collect information, risk of data hacking and it has no auto data processing system.
6.
They maintain website for their internal and external user for performing transaction and providing lots of information to them.
7.
The clients data are processed in both batch and real time processing system.
8.
In Private Banking, segregation of duties and documentation control techniques are used for performing internal control
system.
9.
Daily, monthly, quarterly, yearly and performance report are prepared for internal and external reporting.
10. Both the banks 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.
Recommendation:
The following points are recommended after the study.
1.
All the Private Banks maintain a fixed organizational and data structure which can create problem for new employee to cope
up with the existing system.
2.
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.
3.
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.
4.
They should give more emphasize on their manual (mail & fax) data transferring system.
5.
They should increase more safety for protecting data hacking, error and misuse of data.
After solving all the problem of above it can say Private Banks maintain a proper structural banking system with
the help of AIS.
Conclusion
The accounting information system of private banking sector is in the primitive stage. They have separate AIS
department. From the above analysis and 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. But the impact of computerized AIS is not
significant. 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. They use real time & batch processing for updating their information. But their AIS were not
so effective to provide information.
They should give more emphasis on internal control system, safeguarding assets and information generation or
reporting system. In case of external reporting and internal reporting their actives have lots of gap. In comparing
with the developed foreign banking sector some banks should put more emphasis on web based transaction and
individual online banking system.
Bibliography
References:
Books:
1.
th
Marshall B. Romney, Paul John Steinbasrt, Accounting Information System (10 Edition) (February 2006),
Paul Bocij, Andrew Greasley, Simon Hickie, Business information system: technology, development and
st
th
BRIAN Williams, Stacey C. Sawyer, Using Information Technology (9 Edition), (2010), McGraw Hill.
Annual Reports:
1.
2.
Journals:
1.
Dr. Md. Mohobbot Ali, Farjana Yeshmin & Eti Laila Kazi, Journal of Business Studies, Vol-XXXI, No-02,
December 2010,
2.
Sumon Das, Shilpi Das, Accounting & Auditing, the Bangladesh Accountant, October-December 2008.
Websites:
1.
www.wikipedia.com
2.
www.free-ebook.net/business
3.
www.it4business.org
4.
www.bankinfobd.com