Accounting for Banking - Syllabus
Embark on a profound academic exploration as you delve into the Accounting for Banking course (Accounting for Banking) within the distinguished Tribhuvan university's BBS department. Aligned with the 2013 Syllabus, this course (ACC 250) seamlessly merges theoretical frameworks with practical sessions, ensuring a comprehensive understanding of the subject. Rigorous assessment based on a 100 marks system, coupled with a challenging passing threshold of 35, propels students to strive for excellence, fostering a deeper grasp of the course content.
This 3 credit-hour journey unfolds as a holistic learning experience, bridging theory and application. Beyond theoretical comprehension, students actively engage in practical sessions, acquiring valuable skills for real-world scenarios. Immerse yourself in this well-structured course, where each element, from the course description to interactive sessions, is meticulously crafted to shape a well-rounded and insightful academic experience.
Course Objectives
The objectives of the course are to provide the students with the basic knowledge required to handle the accounting functions of banks. On completion of this course the students will be able to gain the knowledge of total banking accounting practices of the banks. The course further aims at providing knowledge required to analyze financial statements of banks.
Course Description
This course contains introduction, accounting for deposit, accounting for bills for collection, accounting for guarantee and margin deposit, letter of credit (LC), accounting for remittance, accounting for credit and advances, accounting for cash transactions, accounting for treasury management, banking technology products, concept of BASEL framework, anti money laundering (AML, accounting for decision making, accounting for control , preparation of financial statements, financial statements analysis.
Units
Concept of bank account; Rules and classifications of accounts ; Accounting assumptions, principles and conventions ; Evolution of banking industry, Development of banking industry in Nepal; Meaning, nature, objectives, importance and functions of banks; Types of Banks: Central Bank, Commercial Banks, Development Banks, Financial Institutions, Micro Finance Institutions and Co-operative Banks ; Opportunities and Challenges of Nepalese Banking Sector; Legal provisions under Banking and Financial Institutions Act (BAFIA), 2063; Unified directives issued by Nepal Rastra Bank.
Accounting for Deposit
Account Opening, operations and closure of bank account; Concept and types of deposit: current, saving, time or fixed account, hybrid or flexi deposit, calls deposit account, margin account, foreign currency account, special foreign currency account; Process of opening accounts; Inter bank borrowing from other banks and short term borrowing from NRB; Substitutes for vouchers – pay in slip and its meaning; Cheques: meaning and types of cheques; Electronic cheque clearing (ECC); Service charges- concepts and accounting procedures.
Accounting for Bills for Collection
Bills for collection: concept, types and necessity for banking business; Outward bills for collection (OBC): concept and types; Service charges and accounting records for OBC; Endorsement: meaning and accounting procedures; Procedures used in bills for collection; Inward bills for collection (IBC): concept and importance; Document required for IBC; Service charges and accounting records for inward bills for collection; Debit note and required reversal entry; Outgoing debit advice for uncollected or dishonored bills.
Accounting for Guarantee and Margin Deposit
Concept, and types of guarantee deposit; Concept, needs and types of guarantee: Bid bond, Performance bond, Advance payment guarantee, Counter guarantee, Financial guarantee, Standby letter of credit, Bonded warehouse guarantee; Banker’s liabilities and customer’s liabilities toward guarantee issuance ; Accounting treatment of guarantee issue (voucher and ledger); Margin deposit: concept, process and evaluation; Service charges and accounting treatment.
Letter of Credit (LC)
Letter of credit: concept, needs and types of LC; Parties involved in LC; Documents in LC; Trade finance; International Chambers of Commerce and Universal Custom and Practices (UCP) for documenting credit; NRB regulations for LC; Accounting treatment.
Accounting for Remittance
Remittance: concept and importance; Services rendered by remittance; Types of remittance; Parties involved in remittance ; Demand draft, accounting for advice received and un-received demand draft; Account payee draft; Books of original entry for advice received and un-received; Telegraphic transfer and mail transfer; Branch reconciliation.
Accounting for Credit and Advances
Credit creation; Concepts and importance of credit; Types of credit: Cash credit, Overdraft, Secured loan, Micro credit, and other loans: auto, home, credit card, education and social; Security: types and procedures/valuation of securities; Evaluation of feasibility study; Industry risk analysis and Business risk analysis (using six C’s of credit); Accounting treatment of different types of credit; Loan processing charges, interest and commission and their accounting treatment; Collection and recovery of loans method applied and accounting treatment; Credit risk management; Credit creation.
Accounting for Cash Transactions
Receiving cashier’s counter cash book ; Paying cashier’s counter cash book; General cash books, day books and denomination books.
Accounting for Treasury Management
Concept of treasury management; Dimensions of treasury management; Market risk management; Liquidity management; Investment portfolio management; Foreign exchange risk management; Assets liability management ; Maintenance of agency ledger (NOSTRO and VOSTRO).
Banking Technology Products
Banking software; Card operation; Tele banking; Mobile banking; Internet banking and e banking; SWIFT (society for worldwide interbank financial telecommunication); Branch less banking.
Concept of BASEL Framework
Concept and importance; Principles of capital measurement and capital standard
Anti Money Laundering (AML)
Concept, importance and AML Act; Know your customers (KYC)
Accounting for Decision Making
Capital Budgeting: Project evaluation on the basis of Pay-back period, Net Present Value, Profitability Index and Internal Rate of Return; Cost Volume Profit Analysis for project evaluation.
Accounting for Control
General ledger: concept, needs and procedures of maintaining general ledgers; Comparison with commercial accounting; Daily trail balance: concept, needs and preparation and tools for control of general ledgers; Transaction list verification and operational procedures.
Preparation of Financial Statements
Concept and importance; Statement of profit and loss and other comprehensive income (Income statement); Statement of financial
position/balance sheet; Statement of cash flow statement; Statement of changes in equity.
Financial Statements Analysis
Concepts and importance; Ratio Analysis: concept, importance and limitations
Types of ratios
Profitability ratios: Net interest income growth (NII growth), Interest yield, Net Spread, Operating profit growth.
Shareholder ratios: Return on equity, Return on assets, Earning per share, Price earnings ratio, Market price per share, Dividend payout ratios.
Liquidity ratios: Net liquid assets, Net liquidity ratios, Statutory liquidity ratio (SLR), Cash reserve ratio (CRR), Gap analysis.
Activity ratios: Cost of fund, Base rate, Cost to income ratio, Credit deposit ratio, Net interest margin, Non-funded income as a percentage of total operating income, Operating expenses ratio (interest to total operating expense, office operating expense to total operating expenses and HR expenses to total operating expenses) Staff efficiency (per employee income, per employee business i.e. deposit plus loan)
Gearing and Financial ratios: Total borrowing to shareholder fund, Total external liabilities to total assets, Total assets growth, Net worth growth
Cash Flow ratios: Interest coverage ratio, Debt coverage ratio Assets Quality ratios: Non-performing loans to total loans, Loan loss reserves to gross loan, Earning coverage to loan losses, Increase in loan loss reserve to gross income
Earnings ratios: Net interest margin, Non-funded income expenses as a percentage of total operating expenses
Capital Adequacy ratios: Capital fund as a percentage of risk weighted assets