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1.1 Introduction
An early market economy and an early form of mercantilism, sometimes called "Islamic capitalism", were developed between the eighth and twelfth centuries. The monetary economy of the period was based on the widely circulated currency the gold dinar, and it tied together regions that were previously economically independent. A number of economic concepts and techniques were applied in early Islamic banking, including billsofexchange, partnership (mufawada,including limitedpartnerships,or mudaraba ), and forms of capital (al-mal), capital accumulation (name al-mal),cheques, promissory notes,trusts (see Waqf),transactionalaccounts, loaning, ledgers and assignments.Organization al enterprises independent from the state also existed in the medieval Islamic world, while the agency institution was also introduced during that time. Many of these early capitalist concepts were adopted and further advanced in medieval Europe from the 13th century onwards. Bangladesh is one of the largest Muslim countries in the world. The people of the Muslim community wishes to design their economic activities in accordance with the percepts of Islam so the establishment of some numbers of Islami Bank in Bangladesh is the true reflection of long days deep cry in their heart. The Objective of Social Islami Banking is not only to earn profit, but also to do good and welfare to the people. Islam upholds that, money, income and property belong to Allah and this wealth is to be used for the good of the society. Social Islami Banks operate their banking activates based on the Islamic principles of profit and loss sharing and strictly avoiding interest.

1.2 Background and Purpose of the Internship Program

The internship program is an integral part of the BBA program that all the students have to undergo of International Business Administration and Information System University (IBAIS), Dhaka. After the completion of all the courses of BBA program every student needs to complete a 3 months internship program in any organization. The students are sent to various organizations where they are assigned to one or more projects. At the end of the program, the internships are required to place the accomplishments and findings of the project through the writing of the internship report covering the relevant topics. During this program, supervisor guides each student one from the university and the other from the organization. This report is the result of a 3 months (March 14, 2012 to Jun 14, 2012) internship program in Social Islami Bank Limited (SIBL), Dhanmondi Branch, H: 84, R: 7/A, Satmosjid Road, Dhanmondi R/A, Dhaka-1209. This report contains introduction & Accounting Information System of SIBL. The topic of the report has been consulted & directed by the internship supervisor from International Business Administration and Information System University (IBAIS).The purpose of this report is to get an idea about the Accounting Information System of SIBL. SIBL is an Islamic Bank based on Sariah. This report is an attempt to reflect the position of SIBL in the banking industry procedures, policies and activities with emphasis on modern banking system.

1.3 Objectives of the Internship Program

This study is aimed at providing me valuable practical knowledge about banking operation system especially Islamic banking in Bangladesh. It will also help me to develop my concept of banking and its operation. The objectives are: To know the banking system of Social Islami Bank Limited and to give an idea about how SIBL emerged To understand the various services the bank offers and to understand the mechanism of the services To identify the strengths and weakness, opportunities and threats of SIBL. To know about Accounting Information System. To know Accounting Information System of SIBL. To formulate recommendations that could add value to the service of SIBL.

1.4 Rationale/Justification of the Internship

The theoretical knowledge does not get its completeness until & unless practical knowledge is obtained to make the knowledge more applicable in the real world. As I am doing my major in Accounting, I always had my interest on the Accounting Institutions especially on the bank. Because I do really believe that accounting is all about the creativity and skill to learn how to provide information for taking a good decision of a firm. There is a lot of scope to show creativity and analytical ability in this field. Banking sector is one of the fastest growing sectors among the accounting institutions in Bangladesh and Social Islami Bank is one of those banks. So, from the internship work I can know some of information about AIS of SIBL.

1.5 Scope of the Internship Work

The scope of this internship work is limited to the overall description of the bank & its services. The scope of this study may be stated as follows: The study would help top management in planning and decision making. The study would help the management in identifying the key areas of strengths & weakness of Accounting Information System of SIBL. The study would help the management to take corrective and appropriate measure timely to remove the problems from AIS to improve the performance of the bank. The study would also help the clients, borrowers & shareholders as a guide to companys present and future situation.

1.6 Methodology of the Internship Program Report

Methods followed to perform a job or conducting activities to complete a task is called Methodology. My internship report is based on secondary sources of data and primary data collection survey. But the major source of data for preparing this report is based on secondary information like Annual Report.

1.5.1. Primary Sources of Data

When searching in the field directly to collect data is called primary source of data. I collected data from primary source using the following method:

1.5.1.1 Observation Method: Observation method may define as systematic viewing

according to concise Oxford Dictionary accurate watching, nothing of phenomena as they occur in nature with regard to cause and effect and mutual relationship. I have observed overall activities of Social Islami Bank. Through this method, I had observed all the activities of Accounting Information Systems of SIBL during my 3 months internship program.

1.5.1.2 Interview Method: The interview is face to face interpersonal situation in which
one person the interviewer, ask a person being interviewed, the respondent, questions designed to obtained answer pertinent to research problems. In order to get the real information and data about the banks activities, I went directly to various customers.

Primary Sources are:

Discussion with officials of SIBL Face to face conversation with the clients Questionnaire survey Discussion with customers over the telephone

1.5.2. Secondary Sources of Data

The secondary data has been collected from the MIS of Social Islami Bank. To clarify different conceptual matters like Internet, different articles published in the journals and magazines are used.

Secondary Sources are:

Internet Relevant Books, Newspapers, Journals etc. Annual Reports of SIBL 4

1.7 Limitations of the Report

There are many limitations that I have faced while preparing this report is mentioned here: Time was the most important limitation in preparation of the internship report. The program allotted only 12 weeks for entire study, which disable many opportunities for a comprehensive study. Relevant papers and documents were not available sufficiently. It was little difficult to get the actual information because of their internal restriction. In many causes up to date information is not available. As the officers were very busy with their daily work, they could not provide much time. Lack of accessibility to respondents. Account holders situations are some times so far that I could not contact with them more than one time. Clients are not interested to spend time for interview. Problems for lack of my research work.

Published documents and reports

2.1 Background of the Social Islami Bank Ltd.

Social Islami Bank Ltd. (SIBL) became operational on 22nd November, 1995 with a clear manifesto to demonstrate the operational meanings of participatory economy, banking and financial activities as an integrated part of an Islamic code of life. It is an alternative concept of Islamic Banking with a unique human face approach to credit and Banking based on interest free economics and financial transactions and income generating program for the millions of the urban and rural poor and a profitable investment option for the rich to invest, earn and live in a better society with greater security and peace at the operational level, SIBL is operating three-sector Banking, such as, Formal, Non-Formal and Voluntary sector, SIBL is beginning a new era of Islamic Banking having social, ethical and moral dimension in each of its activities ranging from credit to construction, trading to transport, farming to fishing, manufacturing to mining and so on. Some renowned personalities and institutions are sponsors and directors of this bank, specially, the Founder Chairman Prof. Dr. M. A. Mannan who is an internationally reputed Islamic thinker and Professional Economist. He served in different important capacities in different International Organizations including Northern Development Bank and Islamic Development Bank. With his heartiest efforts and inspiration Ex-Secretary General of O.I.C Dr. Hamid AI-Gabid and Deputy Speaker of Saudi Arabia and former Secretary General of Rabeta, Dr. Abdullah Omar Nasseef, and Ex-Commerce Minister of Saudi Arabia Salah Jamjoom took part in the establishment of the Bank. Besides, International Solidarity Fund (IFS) and International Islamic Relief Organization (IIRO) also took part as Sponsors.

2.2 Objectives of SIBL

The ultimate objective of Social Islami Bank Ltd. is to establish a caring and compassionate society in which everybody can participate in all socio-economic activities together to help each other and share ones due. The economic co-operation among different Muslim countries will be expanded to strengthen the prosperity and solidarity of Islamic Urnmah. The cultural tradition and heritage of the vast human resources of the country will be deployed with a view to providing finance and through proper training increase the participation of the people in new production oriented projects in order to build a caring society. Employment opportunities for women, minority community and people of other religions will be inducted in Banks activities and thus establish universal brotherhood among the people having a human touch.

2.3 Vision of SIBL

Social Islami Bank Ltd started its journey with the concept of 21st Century Islamic participatory three sector banking model: i) Formal Sector- Commercial Banking with latest technology; ii) Non-Formal Sector - Family Empowerment Micro-Credit & Micro-enterprise program and iii) Voluntary Sector - Social Capital mobilization through CASH WAQF and others. Finally, "Reduction of Poverty Level" is our Vision, which is a prime object as stated in Memorandum of Association of the Bank with the commitment "Working Together for a Caring Society".

2.4 Mission of SIBL

High quality financial services the latest technology. Fast, Accurate and Satisfactory customer service. Balanced & sustainable growth strategy. Optimum return on shareholders' equity. Introducing innovative Islamic Banking products. Attract and retain high quality human resources. Empowering real poor families and create local income opportunities. Providing support for social benefit organizations - by way of mobilizing funds and social services.

2.5 Values of SIBL

Honesty To be honest is ordained by the scripture we stick to this value in all our service provision. Transparency Remaining transparent in all acts is a virtue that's builds trust - we adhere to it. Efficiency Efficiency implies perfection in any job done - we strive to render full satisfaction with it. Accountability To be accountable is to be responsible and above any suspicion - we are dutifully there. Reliability We infuse reliability in customers' mind through habitual acts of dedicated service. Innovation Our minds and eyes are open to the evolution in quality of life to innovate further benefits for the service takers. Flexibility Flexibility leads to better understanding and greater satisfaction - we pursue the quality. Security Customers must feel secure with all our products and services - we keep on ensuring it. Technology

Modern life is technology dependent - we keep looking for the latest development to provide the best in ease to our clients.

2.6 Organization Structure of SIBL

Figure 1: Organization Structure of SIBL

2.7 Management System and Leadership Style of SIBL

SIBL follows participating leadership approach. Work accomplishment is from committed people with interdependence through a common stake in organization purposed with trust and respect. They are the managers who display in their actions the highest possible dedication both to people and to work. They are the real term managers, who are able to match the service needs of the organization with the needs of the individuals.

Management Hierarchy
Managing Director Additional Managing Director Deputy Managing Director Executive Vice President Senior Vice President Vice President Senior Assistant Vice President First Assistant Vice President Senior Executive Officer Executive Officer Residency Officer Senior Officer Officer Junior Officer Assistant Officer

Table 1: Management Hierarchy

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2.8 Corporate Structure

Table 2: Board of Directors

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Table 3: List of Executives, Board Audit Committee & Shariah Supervisory Committee

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2.9 Management Team

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2.10 Core Decision Making Committee (CDMC)

Core Decision Making Committee is the highest level of Management Committee comprising the Managing Director of the Bank as Core Members and the Heads of different Divisions and Departments attending the meeting. When necessary to support the core committee in its decision making process. This core group formulates and reviews Strategic Planning Decisions and other management and operational policies of the bank. The committee also reviews and accesses the major risk issues of the bank arising from all financial transactions. Major decisions in the areas of human resources management aiming at the best utilization of the available resources of the bank for optimum benefit also tend to be an important agenda of the Core Decision Making Committee. SL No. 1 2 3 4 5 Name Muhammed Ali Md. Shafiqur Rahman A.M.M. Farhad Md. Mohashin Miah M. Shams-Uddin Ahmed Designation MD & Chairman of CDMC MD & Member of CDMC DMD & Member of CDMC DMD & Member of CDMC Member Secretary of CDMC

2.11 Manpower of SIBL

Human resource is the foundation stone for accelerated and sustained development of any organization. The Social Islami Bank recognizes the importance of skilled human resources for overall growth of the Bank. SIBL believe that a congenial working environment and people related policies generate team sprit and promotes a high level of integrity, loyalty, commitment and devotion among the employees. In order to maintain transparency, SIBL follows transparent recruitment policies towards upholding justice to deserving candidates. The Bank particularly stresses the need of training to the employees for their professional improvement. The Bank has a full-fledged training institute with a professional personality as Principal of the Institute. The SIBL Training Institute has been conducting foundation; orientation training courses, workshops, seminars apart from various other Need-based Training Courses. Besides, the employees are drawn up for nomination in the out reach training courses offered by BIBM, BIB, BBTA and other renowned training institute in home and abroad. As a result the management has developed strong and efficient human resources in the bank. The Manpower strength of the Bank was 995 as on December 30, 2011, whereas it was 258 only in 1999.

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2.12 Brief Presentation of Management Functional Areas of SIBL

The functional areas of SIBL are diversified as reflected in the following.

2.12.1 SIBL Department

1. 2. 3. 4. 5. 6. 7. 8. 9.

Information & Communication Technology Division Financial Administration Division International Division General Service Division Managing Director's Secretariat Business Development & Marketing Division Audit & Inspection Department Chairman's Secretariat Share Department Secretariat Resources Division Board Secretariat Institute

10.Board

11.Human 12.Shariah

13.SIBL Training 14.

Investment Department Formal & Voluntary Banking Division & Recovery Division Department Audit Cell Control & Compliance Division Risk Management Division Planning & Research Division

15.Non 16.Law 17.Law

18.Board 19.MIS,

20.Internal

21.Investment

2.12.2 Activities
In Banking, Social Islami Bank has efficient and experienced staff for giving better service to its clients along with modern technology. Its functional area are divided into many sector, they are as follows:

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Formal Sector A. Deposit AI-Wadiah Current Deposit Account Mudaraba Term Deposit Account Mudaraba Notice Deposit Account Foreign Currency Account Social Fund Deposit Account Shelter Finance Deposit Account Cash-Waqf Deposit Account Voluntary Sector Development Deposit Account B. Investment Mudaraba-Trust Finance Partnership Musharaka-Participation Financing /Equity Financing Murabaha- Cost Plus Sale Bai- Muajjal - Sale under deferred payment Bai- Salam - Forward Purchase Leasing -The Bank leases out Machineries, Transport, Houses, Ship etc. for an agreed period of time, the company being the legal owner and the lessee having the right to use the property for the duration of the contract. Direct Investment- This Bank directly invests capital on medium and long term basis in Industry, Agriculture, Trade, Transport, Immovable property and for construction of houses etc. Hire Purchase- In this system of business the bank invests for purchasing durable assets like machineries, equipment, transport, land and building etc. along with the 16

client with the stipulation that the client shall pay off the principal amount with rent (at the agreed rate) in installment. C. Foreign Exchange To purchase and sell foreign currencies and carry on business of import through opening of L.C. D. Remittance This bank remits clients money both at home and aboard, completes all formalities of remittance in respect of Bangladeshi living abroad and other customers. E. Special Banking Services In addition to sale and purchase of foreign currencies the Bank issue Guarantees, accept certificate and shares, accept articles & valuable documents, for safe custody locker service, discharge responsibility as investment trustee, act as client's agents for recovery of client's demand and carry on transactions on their behalf within the stipulated period, work as correspondent of local and Foreign Banks and other Financial institutions, act as; Banker to the issue on behalf of the companies, provide consultancy service to the customers and all other Banking Services. F. Special services for Bangladesh living abroad Provide financial assistance to the Bangladeshis for the travel to the place of employment outside the country, prepare projects for investment of wage earners, accept housing projects and provide other necessary services to them. G. Social Fund The Social Islami Bank considers man not with money but with a human face approach. So, this Bank is firmly committed to provide a human face approach in all its activities. This Bank builds a Social fund with the part of the profit earned by the bank and collects all kinds of gifts, Zakat and Sadakah from clients. This fund is invested in projects for betterment of the less fortunate and poor people of the society. Non-Formal Sector The Bank's special program is directed mainly to up-lift the socio-economic conditions of rural and urban poor. In order to achieve this objective, Social Islami Bank Ltd. is involved in the mobilization and utilization of local resources and the surplus labor mainly from within and provide employment opportunities to the unemployed and the landless besides investing in N.G.O. activities, educational, health expansion activities etc. Social Fellowship Program for Students has already been introduced; Family health service cheque is being introduced. Voluntary Sector

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This Bank has a special program of development of various religious and social service oriented institutions. Within this program, Mosque, Maktab, Waqf, Charitable organizations etc. will be modernized and activated. All properties under this program will be utilized in productive activities on participation basis. Besides, Hajj (pilgrimage) and Kurbani (sacrifice of animals according to dictates of Islam) schemes are included in the program of Social Islami Bank Ltd Cash Waqf Certificate has already been introduced for the first time in history. Various methods of compulsory and voluntary Islamic distribution of finance, such as, Zakat, Sadakah, Waqf etc. will be institutionalized.

2.13 SWOT Analysis of the SIBL

Each company has its own internal strength and weakness and also has external opportunities and threats. So, for the perfect operation of the company, SWOT analysis is very important and is needed to be identified. The report has explored that internal strength and weakness with external opportunities and threats. They are as follows: Strengths 1. Usage of faster PC Bank software 2. Efficient administration & committed employees 3. Fewer default loan 4. Membership with SWIFT 5. Good banker-customer relationship 6. Energetic as well as smart work force 7. First position in CAMEL rating Weaknesses 1. Inadequate Finance: SIBL has not enough finance. That is why they need to borrow money from Bangladesh Bank and other 2. Reluctance to go advertisement 3. Lack of advanced modern technology such as, ATM Booth, Debit & Credit card services 4. This is a problem bank under consideration of Bangladesh Bank 5. Existing manual voucher 6. Shortage of branch 7. Insufficient employees

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Opportunities 1. Huge area of business growth 2. The opportunity to expand the business as most of the people in our country are Muslim 3. The opportunity to expand by introducing any branch banking through online like other competitors 4. The opportunity to expand the market outside the country as there is a great demand of Islamic Shariah based bank in the Muslim world 5. The opportunity to raise up the fund as Bangladesh Bank permit SIBL to issue the right shares 6. Government support for the problem bank Threats 1. Huge competitors in the Islamic banking industry 2. Entrance of new private commercial bank 3. Different services like phone banking, home banking etc. of foreign commercial bank 4. Daily basis interest on deposit offered by HSBC 5. Local currency devaluation & Inflationary pressure 6. Political unrest

2.14 Deposit Account

There is mainly 3 deposits accounts deal by SIBL. These are described in below: 1. Al-Wadiah Current Deposit (AWCD) Account Al-Wadiah Current Deposit Accounts are opened on proper introduction with minimum initial deposit fixed by the Bank. Al-Wadiah Current Deposit is accepted on Al-Wadiah principles which mean Al Amanah with permission to use. According to this principle Bank can use the fund of the account along with other funds as per Shariah at bank's own risk. Account holder(s) will not share any profit/loss. The Law and regulation of Bangladesh, usual customs and procedures common to banks in Bangladesh including Islamic Banking

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Principles shall apply to and govern the conduct of account opened with the Bank. Withdrawal can be made only through cheques issued by the bank. The A/c. holder(s) shall preserve the cheque book with utmost care so that it might not be lost or stolen. For any misappropriation taken place through any such stolen or lost cheque, the Bank shall not be held responsible. The depositor shall take back the pay-in-slip after deposit of any money or cheques etc. clearly specifying the number and title of account in the slip. All cheques, DD/PO etc shall be crossed before deposit. Bankers shall note "Stop payment" of the account holder with due care. Payment of any such cheque, the Bank shall not be held responsible. Any change in the address of the depositor should be immediately communicated to the bank. No responsibility can be accepted by the bank for delay, non-delivery etc. of letters, remittances etc sent through Post office and other agents. Bank makes entry in the account with due care. However, for any wrong entry, the Bank reserves the right for adjustment/correction and no responsibility can be accepted by the bank for any loss caused by the account holder due to such inadvertent/wrong entry passed by the Banker. The Bank reserves the right to close any account without notice and alter, add any or all of the rules and such altered/additional rules shall immediately thereafter be deemed to be binding on the account holder. Requirements to open an AWCD To open an Al-Wadiah Current Deposit (AWCD) Account the following terms and conditions are required: a) Three copies passport size photos of A/C holder attested by the Introducer b) One copy passport size photo of Nominee attested by the A/C holder c) An introducer who has account on this Bank d) Trade licenses e) TIN certificate f) At least TK.500 initially deposited etc. 2. Mudaraba Savings Deposit (MSD) Account To open a Mudaraba Savings Deposit account in SIBL the following rules and regulations are applied: Mudaraba i.e. Deposit of one party and on the basis of operation by another party this deposit is taken. By providing Introducer of the account as required by the bank and by depositing a minimum amount any depositor or multiple depositors can open single or joint

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account. Any educational institute, Club, Association or Social institutes can open this account. The bank may merge amount collected through this deposit and may invest in any shariah allowed investments. After determining the annual profit/loss the depositor will get his part of profit. In case of balance declining below bank stipulated margin in any month profit shall not be provided for that month. Any amount can be deposited in any working hour but for applying profit the lowest amount from 6th day till the last day of the month will be taken as the deposit of that month. Amount must be withdrawn only by bank issued instruments like cheques. Amount can be withdrawn twice a week but highest 4 times a month. One fourth of the deposited amount or Tk.2000/-, the lowest can be withdrawn without notice. If any amount exceeding the above is withdrawn without providing 07 days prior notice then no profit will be applied for that month. If an account is closed before the declaration of current years profit rate then the depositor will have to take profit as per previous years declared profit rate. The Bank has the right to deny opening any account or can close down any existing with showing any reason. The bank operates the client accounts with utmost attention but still if any miscalculation occurs the bank holds the right to make adjustments and rectify the problems. But in this situation if any miscreants occur which is caused by the client the bank will not be hold liable for that. The Bank may change / amend / rectify any rules and regulations of this account and the client must abide by the rules. The depositor by will may contribute a minimal percentage to his selected Social Development works. Requirements to open a MSD To open a Mudaraba Savings Deposit (MSD) Account the following terms and conditions are required:

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Three copies passport size photos of A/C holder attested by the Introducer One copy passport size photo of Nominee attested by the A/C holder An introducer who has account on this Bank National identity card & passport TIN certificate At least TK.500 initially deposited etc

3. Mudaraba Term Deposit Receipt (MTDR) Account Mudaraba Term Deposits are accepted by the bank with a sum of Tk.5000 or above (multiple of 1000) from individuals (single and joint), firms (proprietorship/partnership), limited companies, autonomous bodies, charitable institutions, association, educational institution, local bodies, trusts, etc, against issuance of non transferable receipts in acknowledgement of MTDR. MTDR account may be opened in the names of minors jointly with their guardians. For example: Received from Mr. X Guardian of Mister/Miss. (Minor). The MTDR are accepted for periods of 12, 24, 36 months. Weight age on the rate of return is given to deposits of longer maturity. The Bank reserves the right to invest the funds received in MTDR accounts, in its sole judgment, in any interest-free "Halal" business it deems fit. The MTDR account holder will share the profit of investment with Social Islami Bank Ltd, at the rate declared by the bank from time to time. Any loss which cannot be covered by the investment loss offsetting reserve will be adjusted from Mudaraba fund and in that case the bank shall not take any remuneration for the service rendered in managing the fund. The profit earned on Mudaraba Term Deposit account will be credited as determined by the bank as its sole direction on the basis of its net working results at the end of the year, within a reasonable time from the die of the close of the books of accounts of the bank. The banks decision in this respect will be final & binding on the Mudaraba Term depositors. If the Mudaraba Term Deposit account is closed before declaration of profit of current year, the depositor shall accept profit at the rate declared in the preceding year. In that case, both the bank & the depositor will relinquish their claim on difference amount of profit, which may accrue at the close of the year. The MTDR account holder is not allowed to withdraw the amount before maturity date. But on obtaining the Bank's prior consent the depositor may withdraw the deposit before maturity without any profit i.e. no profit a loss basis. The MTDR account holder may withdraw the profit amount annually if he so desires on condition the final adjustment. If needed will be made at the end of the year. MTDR account holder will give an undertaking to that effect. If the profit amount is not withdrawn it will automatically be added to the principal amount annually and the entire amount will earn profit/loss. MTDR is not a transferable instrument & as such it cannot be endorsed in favor of others. The MTDR should be preserved properly. In case of loss, the account holder should notify 22

the issuing branch immediately by quickest possible means so that the bank can take care of. Matured deposit if not enchased within one month of maturity, the deposit shall automatically be renewed for the period it kept before. Any change in the address of the depositor should be immediately communicated to the bank. No responsibility can be accepted by the bank for delay, non-delivery etc. of letters, remittances etc sent through Post office and other agents. The bank retains the right of refusing to accept any deposit from any person in MTD account without assigning any reason. The bank reserves the right to add or alter any or all the rules governing this scheme and such altered or additional rules shall be immediately thereafter be deemed to be binding on all depositors. Requirements to open a MTDR To open a Mudaraba Term Deposit Receipt (MTDR) Account the following terms and conditions are required: One copy passport size photo of A/C holder attested by the Introducer One copy passport size photo of Nominee attested by the A/C holder An introducer who has account on this Bank National identity card & passport TIN certificate The minimum deposit amount is TK.10, 000 etc.

2.15 Deposit Schemes

Different Deposit Scheme issued by SIBL is as follows: 1. Mudaraba Monthly Profit Social Islami Bank Ltd is an Islamic Bank ruled by Islamic Shariah. The bank is operating in Formal, Non-Formal and Voluntary banking sector for alleviating poverty in the Bangladesh. But to reduce poverty in a country like Bangladesh there is no other alternative but increase internal deposit. Increase in deposit will increase investment and new investment will result in more employment. For this reason SIBL have introduced "Mudaraba Monthly Profit Scheme". Under this scheme the depositor will get monthly profit on the deposited amount. The reasons for introducing this scheme are as follows: a. The scheme provides monthly profit for service holders who may deposit the pension benefit. b. For those Bangladeshis working abroad willing to deposit once and provide a fixed amount monthly to family and relative residing in Bangladesh.

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c. The trust and foundations willing to provide monthly scholarship to students against one time deposit. d. For the parents who wants to bear education cost. 2. Hajj Scheme Hajj is one of the most important bases of Islam. Religious Muslims tends to perform Hajj when they gather financial ability. But they find it difficult to gather the required amount to perform as there is no such systematic way of saving the money. To help our Muslim brothers Social Islami Bank Ltd introduced Hajj/Umrah Scheme. The basic rules of this scheme are: a. This account shall be called as Hajj/Umrah Savings Scheme. b. Any Muslim Residing in Bangladesh may open an account under this scheme. c. This scheme will be accounted under Mudaraba rules. The Bank as Mudarib and the account holder will be treated as Sahib-e-Mal. The account holder will have to enjoy the Profit / Loss of the Banks respective year. d. The depositor will be provided with a Deposit book and the deposited amount must be written and verified by the Bank's authorized official. In case of losing the deposit book Tk. 20 has to be deposited for issuing a new one. e. In case of change of address the bank must have to be notified as soon as possible. f. The savings of this scheme can be used g. Provisional profit will be charged on June and December closing. If the account holder is unable to perform the Hajj/Umrah or any other person does not perform instead of the account holder then the corresponding account will be treated as a Mudaraba Savings account and accordingly profit will be distributed. h. An introducer must be there to open an account. i. Any installment size can be chosen during the opening of the account, which cannot be changed afterwards. j. This scheme can be opened in the name of any under-aged people. In such cases the rules relating to open an account for an under-aged person must be followed. k. In case of closing the account before maturity profit will be given as per rules of Alwadiah Current account. No profit will be given in case of closing the account before 6 (Six) months.

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l. Monthly installment of the account will be deposited within 10th day of each month. Any advance installment is always appreciable. m. If a depositor fails to deposit the installment of one month then in the next month two installments must be deposited in due time. In case of failing of two consecutive installments, prior permission of the Branch incumbent must be taken to deposit all the pending installments. n. In case of failing of 3 consecutive installments the account will be automatically changed to savings account. o. Money cannot be withdrawn from the Hajj/Umrah account therefore cheque book will not be issued. p. After the scheduled time of the scheme if the accumulated amount with profit is less then the amount of total estimated cost to perform Hajj/Umrah then the account holder must deposit the rest amount at a time. If for any reason the account holder cannot perform q. Similarly if the total cost for performing Hajj is less then the accumulated amount the rest will be returned to the account holder. r. The account holder while disbursement of total amount must provide adequate proof of identity. s. The Bank retains the authority to change, modify, rectify or cancel the rules regarding the scheme and the account holder must abide by the decision. t. Tuition expenses of their child against deposit. The features of this scheme are as follows: 1. Tk. 1,00,000/-, 1,10,000/-, 1,20,000/- or 1,25,000/- or any amount multiple can be deposited under this scheme. 2. The duration of the amount should be for Five years. 3. Profit a. b. shall be distributed under Tk. Tk. this scheme 900 1000 as follows: (net) (net)

1,00,000/1,10,000/-

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a. b.

1,20,000/1,25,000/-

Tk. Tk.

1,100 1150

(net) (net)

4. The payable profit will become due after 1 month of deposit. But the amount will be deposited to account in the last week of the month. 5. Generally, a depositor cannot withdraw the amount before 5 years. But, in unavoidable circumstances the depositor can withdraw the amount and in that case 6. The depositor will have to submit the duly filled application form of the scheme. 7. The depositor will have to maintain a Mudaraba Savings account in which the profit of the scheme will be deposited. 8. In case of change of address the depositor must inform the bank as soon as possible. 9. If the scheme is closed before 1 year then no profit will be given. 4. Mudaraba Special Savings (Pension) Scheme Generally people wants save a portion of their income for economic assurance at old ages. For this reason a unique kind of savings scheme has to be introduced so that a portion of income can be deposited regularly for a long time span. This enables a person to get quite a considerable amount after maturity. Taking the above reasons into account Social Islami Bank Ltd, a joint venture Islamic bank have introduced monthly installment based "Mudaraba Special Savings (Pension) Scheme". Under this scheme any person can deposit a fixed amount monthly and after maturity the depositor will get a handsome amount with increased profit. The depositor may encase the total amount at a time or can take as monthly pension until a stipulated time. Intentions and Goal of the scheme: 1. To create awareness to deposit among average income people. 2. To create a chance for attractive deposit scheme. 3. To create an interest free investment. Eligibility: 1. Any Bangladeshi person aged above 18 yrs and having sound mental condition can may open this scheme. 2. To open this account there must be a signature of a valued introducer. 3. Parents or legal guardians can open this scheme in the name of their under aged children. Rate of installment: Tk. 100/-, Tk. 200/-, Tk. 300/-, Tk. 400/-, Tk. 500/-, Tk. 1000/-

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Profit & Wastage: The depositors will get a percentage from the shariah-based investments made by the bank: Duration of the Scheme 5 years 10 years Wastage 1.05 1.08

The maturity amount may be more or less than the estimated amount. In case of amount withdrawn before 6 months no profit will be applied. In case of amount withdrawn before 5 yrs but after 6 months profit will be applied as Mudaraba Savings Rate. In case of 10 years scheme if the amount withdrawn after 5 yrs then profit will be applied as per MSDPS rate for 5 years and for the rest period profit will be applied as Mudaraba Savings Rate. After the end of scheme period the depositor may take the matured amount with profit by fixing a monthly take home amount. After maturity estimated profit will be applied as follows: Monthly Installment 100/200/300/400/500/1000/Estimated amount after maturity 5 years 10 years 8000/22500/16000/45000/24000/67000/32000/90000/40000/112500/80000/2,25,000/-

Nominee selection The depositor may nominate single or multiple person of his account. In case of multiple people being nominee then percentage of each nominee must be mentioned. In case death of the nominee the depositor may change the nominee by providing notice to the bank. Automatic close of the account If the depositor fails to deposit 3 (three) installments consecutively before completion of 5 years of the account then the account will be closed and profit will be applied as per Mudaraba Savings Deposit rate.

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Others 1. The depositor must deposit the installment by cash or cheque within 15th day of each month. In case of 15th day being govt. holiday then the amount can be deposited in the next working day. 2. In case of clearing cheque is not collected within 15th day then the depositor will be treated as defaulter for that month. 3. The amount and duration of the scheme will not be changed. 4. The account can be transferred from one branch to another by a written application mentioning the actual reason of transferring. 5. The depositor can close the account any time with a service charge of Tk. 25.00. 6. VAT, TAX as applicable by Govt. must be borne by the depositor. 7. The bank reserves the right to add or alter any or all the rules governing MSDPS and such altered or additional rules shall be immediately thereafter be deemed to be binding on all depositors. 4. Mudaraba Millionaire Scheme People of Bangladesh are the followers of Islam. They are mostly interested to make interest free deposits. Taking these facts into consideration SIBL a joint venture Islamic bank introduced a monthly installment based "Mudaraba Millionaire Scheme" 4.1 Rules and regulations of this scheme 1. Tk. 550/-, Tk. 1050/- or Tk. 2050/- is taken as monthly installment under Mudaraba principles of Islami Shariah. 2. Duration of this scheme will be 15, 20 and 25 yrs. After maturity an estimated amount will become as follows: Duration Monthly Installment Estimated amount after maturity 15 2,050/Tk. 10 lac 20 1,050/Tk. 10 lac 25 550/Tk. 10 lac 3. The amount in the above is an estimated amount and may vary at maturity. 4. After starting of operation of this scheme size of installment cannot be changed. 5. Rules of depositing installment:

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a. Installment must be deposited on or before 15th day of each month. Otherwise the installment will be treated as defaulter. b. In case of 15th day being a govt. holiday installment can be deposited in the next working day. c. Installment can be deposited by cheque also but the clearance date of the cheque will be treated as deposit date. d. The depositor can deposit his/her monthly installment from his/her Savings/ Current/MND account through permanent standing instruction. 6. Any depositor may open one or more account in the same name in the same branch. 7. In case of the scheme account is closed before maturity then profit will be applied at the rate of Mudaraba Savings Deposit. But if the account is closed before 6 months no profit will be applied. 8. 80% of the amount deposited can be taken as loan but profit rate decided by the bank must have to be paid by the client. 9. If a depositor fails to deposit 4 consecutive installments then the account will be closed and profit will applied as per rate of Mudaraba Savings Rate. Profit for the first 06 (Six) months shall not be applied. 10. The Bank reserves the right to invest the funds received in Mudaraba term deposit accounts, in its sole judgment, in any interest-free "Halal" business it deems fit. 11. In case of change of address or telephone number the depositor must inform the bank immediately. The bank will make correspondence with the depositor by postal service and in case of missing or delay in delivery, the bank will not be liable. 12. a. After the death of the depositor the legal guardian of immature nominee or the nominee himself can continue the scheme. In this a new agreement must be signed with the bank. b. After the death of the depositor the nominee by providing adequate prove to the bank. c. The account is matured before the nominee becoming matured then the legal guardian may encase the amount by providing adequate prove to the bank.

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13. Any Tax, VAT or Excise duty as applicable by Govt. will be deducted from the account. 14. The bank reserves the right to add or alter any or all the rules governing this scheme and such altered or additional rules shall be immediately thereafter be deemed to be binding on all depositors.

5. Mudaraba Education Savings Schemes Education expenditure especially for higher studies is increasing day by day. In many cases children loses the chance of education as their guardians become unable to adjust with the expenditure. But if proper financial planning is adopted earlier then it is easier for the parents to bear the expenses. For these reasons SIBL has introduced "Education Savings Scheme", which is based on Shariah Principles. This scheme would enable our parents to bear child's educational expenses in a planned manner. 5.1 General Rules & Regulations of Mudaraba Education Savings Scheme 1. Any amount of Tk. 25,000/- or multiple is accepted in this scheme. 2. After maturity the amount can be en cashed at a time or can be taken for the next 6 (Six) years of maturity as mentioned in the following table: 3. The abovementioned maturity amount may differ due to the annual profit rate achieved by the Bank. The depositor will get more or less depending on the profit rate. 4. For the above mentioned reason the depositor may get more or less amount of monthly allowance also. 5. The depositor will get a receipt on the deposited amount. 6. In order to receive the monthly education allowance the depositor will have to submit all the Receipts duly discharged and proper instruction must be provided in writing to nominate a person for receiving the allowance. 7. The instrument cannot be en cashed before maturity. In case of emergency if the depositor wants to en cash before maturity the following rules will be applicable: a. If the instrument is encased before 7 years then Mudaraba Savings Deposit will be applied on the deposited amount.

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b. If the amount is en cashed after 7 years then amount will be given as per rules of 7 years scheme and for the rest years Mudaraba Savings Deposit rate will be applied. 8. a. In case of Death of the depositor the amount payable will be paid to the nominee. If there is no nominee by submitting Succession certificate the amount will be paid to legal successor of the depositor. b. In case of death of the depositor if the nominee wants to take monthly allowance for 6 six years then the instrument must be submitted to bank and should be duly discharged. 9. To issue a duplicate instrument the rules for issuing duplicate Term deposit will be applicable. 10. TAX, VAT, Excise Duty as applicable by Government will have to be borne by the depositor. 11. Bank authority has the authority to change/amend the rules and regulations regarding the scheme as and when required and the depositor must abide by the rules.

7. Mudaraba Bashstan Savings Scheme Housing has become one of the most fundamental needs of human civilization. But in this early 20th century most of the people of Bangladesh are lacking to fulfill this basic need. As a follower of Islamic Shariah, Social Islami Bank Ltd focuses forward to help people to fulfill this basic need. Main features of this scheme: a. The applicant has to fill the application form duly. b. An amount of Tk. 500/-, 1000/-, 1500/-, 2000/- or any amount multiple can be deposited under this scheme. c. The depositor will enjoy earnings from investments under Islami Shariah based Mudaraba rules. d. As per rules of Islami banking the actual amount may vary from the estimated amount.

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e. In case of failing of 3 (Three) consecutive installments the account will be closed. In such cases profit will be given as per savings account rate, but no profit will be given if the account is closed within 6(Six) months. f. The account holder may choose any installment size on account opening, which cannot be changed later. g. Installment must be deposited within first 15 day of the month. Any amount deposited as advance installment is always welcome. h. The scheme is 15 years long and if the depositor intends to withdraw the amount then profit will be given as per savings rate. i. TAX, Yearly excise duty etc applicable on the profit will be borne by the depositor. j. In case of change of address the Bank should be notified immediately. k. An account in the name of under-aged person can be opened under this scheme. l. After successful continuation of the scheme for 5 years the depositor may take up to 80% loan of the deposited amount. m. After successful completion house building loan facility from the bank may be considered by the bank authority. n. The Bank retains the authority to change, modify, rectify or cancel the rules regarding Bashthan Savings scheme and the account holder must abide by the decision. o. Income tax imposed on the earnings from the deposited amount should be deducted from depositors account.

2.16 Graphical Presentation of Customer Deposits The total amount of customer deposits of SIBL from the year 2001 to 2011 is shown through the following chart: 32

Figure 2: Graphical Presentation of Customer Deposits

The above graph represents that the total yearly amount of customer deposits is increasing from the year 2001 to 20011.

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3.1 What is Accounting Information System?

Accounting is the service function that seeks to provide the users with quantitative information. On the other hand a maid is an information system that is designed to make the accomplishment of accounting function possible. AIS process data and transactions to provide users with the information they need to plan, control, and operate their business (Romney ET al.1997:2). An accounting information system can be a manual system, or a computerized system using computers. Regardless of the type, AIS is designed to collect, enter, process, store, and report data and information. The following paragraphs explain AIS in details.

3.2 Data input function

In manual AIS, the data are compeered with the source documents and directly processed in journals and transferred to ledger accounts. On the other hand, in computerized AIS, after data are captured, they should be converted into machine-readable form. In most computerized AIS, source data automation devices that capture data at the time and place of their origins are used. For example, barcode scanner used in retail stores can record the sale transaction just as scanning devices read the codes located on the products. In addition to the data scanned into the computer, their existing data bases that contain stored data for future processing. A database includes information about entries. An entity is something about which information is stored. For example, information about existing customers is stored in database. In this case, customers represent entities. Information about customers such as account number, credit limit, and current balance of the customer can be stored in the

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database. Master files are used to store data about entities in database in computerized AIS. Master files have replaced the subsidiary ledgers that are used in manual system. For example, records in accounts receivable master file include customer name, customer account number, address, and balance due. Master files are frequently updated as transactions are taking place. For example, as sales are made or receivable are collected, accounts receivable master files are changed.

3.3 Data processing

After the data are collected and entered into computers, they are processed. The most common data are processing of transactions to update stored data. For example, when sales transaction takes place, data are entered into the computer. In turn, computer immediately updates sales and accounts receivable files. In computerized system, records are updated by using primary keys that uniquely identifies each record. For example, when a sales transaction takes place, related customer file should be updated. In order to find related customer master file, customer account number can be used as the primary key because every customer has unique customer account number. In other words, it is not possible that two or more customers have common customer account number.

3.4 Information output

After the data are entered into the computer and processed, information output is produced to meet the needs of the users. Information is presented to a query. Documents are records of transactions or company data such as invoices. These documents van be printed out using printers. In addition, they can be stored as electronic images in the computer database. Reports are prepared for internal and external users. For example, to meet the needs of external users such as creditors, financial statements should be prepared. In addition, computers can be programmed to display financial information automatically in a required from such as spreadsheets. Today electronic communication system enables companies to transmit financial reports to the users electronically. This of course, eliminates paperwork and reduces costs. In addition to the reports produced for the needs of external users, reports can also be produced to meet the needs of the internal users such as managers. Sometimes, documents and periodic reports may not be enough to meet the needs of the users. If unexpected problem arise, managers can enter the system and query the information they need. A user enters a request into the computer to get the information, and the computer performs necessary tasks to solicit the required information. Once found, the information is retrieved and analyzed by the user. In manual AIS, transactions are first recorded in journals and they are posted to ledger accounts. At the end of each accounting period, financial statements are prepared by using the ending balance of ledger accounts. On the other hand in computerized AIS all the information is gathered in relational tables. In the case, financial statements can be prepared at any by entering necessary command into the computer.

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3.5

Manual vs. Computerized Accounting System

3.5.1 Manual Accounting Manual accounting systems utilize several paper ledgers to record financial transactions. Companies have separate ledgers for each part of the accounting system, such as accounts payable, accounts receivable and sales. Accountants then consolidate these ledgers into one general ledger, providing the balance for each ledger. The general ledger notebook assists in creating financial statements. 3.5.2 Manual Accounting Benefits While tedious and time consuming, manual accounting system offers some benefits. The ledgers are easy to review and accountants can make simple changes if necessary; individual accounts are easily reconciled because information is in a systematic order through each ledger. Accountants also have the benefit of physically handling each ledger and creating notes in customer accounts regarding any issues that need clarification or corrections.

3.6

Computerized Accounting

Spreadsheets and accounting information system require accountants to enter financial data into them, and then mathematical algorithms compute the information into the necessary ledgers and financial statements. Computerized system also allows accountants to create trending analysis and report any variance quickly and accurately. Additionally, transactions from all company divisions are accessible through computerized accounting systems, giving accountants better access to financial information.

3.6.1 Computerized Accounting Benefits

Computerized accounting offers several more benefits than manual accounting: accountants process more information quicker; formulas verify calculated totals and errors are less common. Accounting systems also are customizable by industry, allowing accountants the opportunity to use preset templates for their general ledger. Accountants also can store several years of financial information with relative ease, giving them the opportunity to review previous years information without sorting through stacks of paper ledger.

3.6.2 Best Method

Most companies will use a computerized accounting system for recording and presenting their financial information. This system allows companies to record business transactions accurately and generate financial reports quickly for management review. 37

While the functions of manual accounting have changed, it will never go away completely. Accountants must review the information presented on financial reports from the accounting system and ensure that it is accurate valid. Accountants must also ensure that all financial information follows the Generally Accepted Accounting Principles and any other guidelines from regulatory agencies.

3.7 Components of accounting system

An accounting information system is a system of collection, storage and processing of financial and accounting data that is used by decision makers. An accounting information system is generally a computer based method for tracking accounting activity in conjunction with information technology resource. The resulting statistical reports can be used internally by management or extremely by other interested parties including investors, creditors and tax authorities. Accounting information system is composed of six main components:
1. People: users who operate on the system. 2. Procedures and instructions: processes involved in collecting, managing and

storing the data.

3. Data: data that is related to the organization and its business processes. 4. Software: application that processes the data. 5. Information technology infrastructure: the actual physical devices and systems

that allows the AIS to operate and perform its function.

6. Internal control and security measures: what is implemented to safeguard the data?

3.8

The basic functions of an Accounting Information System

An accounting information system (AIS) provides financial information about a business. This information helps managers plan and control operations and provides reports to outside parties such as stockholders, creditors and governments agencies. Parts of an accounting information system might include financial reporting, cost accounting, management accounting and enterprise resource planning (ERP).well-designed AIS gives a business a consistent way to view and analyze financial information and has three basic functions.

3.9 Collect and store data

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One function of an accounting information system is to effectively and efficiently collect and store data about business activities and transactions. The system must capture transaction data on resource documents, record transaction detain journals to present chronological record of transaction, and post data from journals to ledgers that sort the data by account type. 3.10 Provide information The second function of an accounting information system is to provide information useful for making decisions. This information usually involves reports in the form of financial statement and managerial reports. 3.11 Provide controls The third function of an accounting information system is to incorporate controls to ensure the accurate recording and processing of data. The system must make certain that the information that comes out of the system is reliable. Ensure that business activities are efficient and in line with managements objectives and keep business assets safe. Traditionally, bookkeepers and accountants did the work of accounting system is by hand on paper, but today much of the work is automated with computers. According to Maryville University, setting up an accounting information system requires analysis, accounting applications, internal control requirements, information technology (IT) auditing and accounting requirements. 3.12 Objectives of an accounting system An accounting system serves to inform interested parties of past performance and to provide guidelines for future performance. It should provide information that is understandable, is useful and allows investors and creditors to predict future cash flows. The accounting system should measure the efficiency of a companys use of resources and how it converts resources into earnings. 3.13 Users drive objectives End users of the information, known as stakeholders, drive the accounting system objectives. Accounting to the financial accounting standards board, stakeholders are interested in the financial condition of a company because there is a financial tie to the company. These stakeholders can be internal users (members of the board of directors, management and employees) and external users (investors, creditors, suppliers, analysts and customer). An accounting system should be able to satisfy the information requirements of both groups. 3.14 Types of accounting information system According to the small business administration, an accounting system should provide both management and financial accounting information. Management accounting information, also known as managerial or cost accounting focuses mainly on financial reporting for internal users. Financial reporting, on the other hand, is geared toward external users. A companys accounting system should allow both users of managerial and financial accounting to drill down into details that drive performance. The system should allow for adding notes to the financial information to provide clarity to users. 39

3.15 External funding information External users often require detailed information from an accounting system. For example, external users such as creditors need information about the income and growth of a company to decide whether to lend to the company and what interest rate to charge to cover the risk. Investors need information to decide if they should buy, hold or sell shares of a company. Investors should have access to past company performance and future prospects for earnings growth.

3.16 General purpose financial statement

An accounting system should have an objective to produce an accurate balance sheet, income statement and cash flow statement. The balance sheet displays the resources and obligations of a company at certain point in time; the income statement reports sales, expenses and net income over a specific time span; the statement of cash flows reports, for a certain time period, the amount of cash generated and used by a company through operating, financing and investing activities. The accounting system should be able to produce these statements with reasonable speed and at a low cost to the company. 3.17 Subsystems of accounting information system Accounting information system is an information system which handles issues related to accounting in a company or organization. In practice, the SIA is divided into several subsystems. This is because SIS is a fairly complex system, thus divide several subsystems to facilitate implementation. In this post I will discuss about this accounting information system (AIS).Here subsystem accounting information system is

The circle includes sales and revenue in from of cash. The expenditure cycle purchasing activities and payment with cash. The human resources/payroll cycle includes the activities of contract and hires employees.

The production cycle the process of chancing raw materials into finished material. The financing cycle includes activities to get data from investors as well as their payments again.

In accounting information system all subsystems on recoded or entered into the system. So that, every details of transaction are stored in the database systems. Here was a brief

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description of subsystems of accounting information system .if there are errors or omission please justified or added .may be useful. 3.18 Users of accounting information system Accounting is an information system which identifies records and communications this information to the interest users in the form of financial statements. These financial statement are transferred to the Users of Accounting Information for making informed accounting decision because an effective and well organized financial report encourage the decision makers to make greater decisions. These financial reports are transferred to the users in two forms-internal and external. Internal financial reports are used by an individual who runs, manages and operates the daily activities of inside area of an organization manager, supervisor, financial director are the most featured examples of internal users and their area of work is referred as managerial accounting. Management accounting generally deals with the information which is needed for organizing, planning and directing the internal task of an organization. Management accounting provides detail information of internal financial report to the internal users to make decisions for their company. This information is not available to the outsiders. For example, management accounting of ABC Company focuses on the information regarding the producing cost of any item, the number of product they need to produce; the way to produce the product etc. after having all these detail information, the management accounting of ABC Company will make informed decision. External financial reports are used by individual and organization who want financial accounting information. External users are not the part of management of the company but they are interested to have financial accounting information about the company. External users get this accounting information through balance sheet, income statement and cash flow statement. There are many external users but investors and creditors are most common of them: Creditors: Creditors (Lenders) are generally focused on those information which are related to the borrower before making a large loan such as the Bank (creditors) will want information about the borrower regarding some criteria: the ability of the borrower to repay the loan, the amount of assets and liabilities of the borrower, evidence of income, tax policies and so on. The creditors will make the loan after having this detail information through financial accounting statement of the borrower. Investors: Investors generally provide money to individual or organization to start a business. Before investing money investors generally want to know whether they should invest or not or if they would invest to start a business now then how much return they will get from their investment. The investors will decide based on the financial accounting information of that business. 3.19 Other Users

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Government Regulatory Agencies: Government regulatory agencies like Federal and State Government Agencies and Security and Exchange commission want financial accounting information which is related to the investors, business organization or any individuals. These regulatory agencies want the information to know that whether the business organizations are following the business rules and regulation or not or whether the investors are able to invest or make decisions or not. Securities & Exchange Commission want accounting information to evaluate the financial accounting disclosures of companies who sell their share or borrow money. Taxing Authority: Taxing authority wants financial accounting information related to the tax policies; tax laws, amount of payable tax etc. form the individual or organization. Taxing authority wants financial accounting information to know that the business organizations are following tax rules or not and their ability to pay income tax because income tax is based on the financial accounting reports. Suppliers & Customers: Sometimes customers also want to know about company on issues like warranty, product development etc. Suppliers want to know about companys future goals so that they can serve best materials in coming days. Employers and Labor Unions: Employers use accounting information for their own benefit. Accounting information helps the employee to ensure their future benefit from the company like pension, health provision, retirement benefit etc. Labor unions want accounting information to know their future salary. 3.20 Benefit of Accounting Information System An accounting information system (AIS) is a system that first collects and stores data and then processes it into information used by investors, creditors, and managers. An accounting information system provides accurate and timely financial information for internal management purposes. This information generated from AIS can ultimately help decision makers to manage organizations more efficiently. The term AIS is most commonly referred to as a complex computer based system combining the resources and capability of information technology with traditional accounting methods and controls. It can also integrate and fulfill departmental and companywide objectives. An Accounting Information Systems are composed of five main components:
1. Software: Application that processes the data. 2. Internal controls and security measures: What is implemented to safeguard the

data?
3. Data: Data that is related to the organization and its business process. 4. People: Users who operate on the system.

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5. Information technology infrastructure: The actual physical devices and systems

that allows the AIS to operate and perform its function.

6. Internal control and security measures: what is implemented to safeguard the data?

When AIS is implemented, organizations sometimes make the mistake of not considering each of these six components and treating them equally in the implementation process. This results in a system being built 3 times rather than once because the initial system is not developed to meet the requirements of the company, the organization than tries to get the system work and ultimately, the organization begins again, following the right procedure so that they can be benefited from AIS and then gain huge profits. 3.21 What are Management Information Systems? Management Information Systems (MIS) is the study of people, technology, and organizations and the relationships among them. MIS professionals help firms realize maximum benefit from investment in personnel, equipment, and business processes. Its a people-oriented field with an emphasis on service through technology. If you have an interest in technology and have the desire to use technology to improve peoples lives, a degree in MIS may be for you. All businesses use information systems at all levels of operation to collect, process, and store data. This data is aggregated and disseminated in the form of information needed to carry out the functions of business. Everyone who works in business, from someone who pays the bills to the person who makes employment decisions, uses information systems. A car dealership could use a computer database to keep track of which products sell best, and a retail store could use a computer-based information system to sell products over the Internet. In fact, all businesses are concentrating on the alignment of MIS with business to achieve competitive advantage over other businesses. MIS professionals create information systems for data management (i.e., storing, searching, and analyzing data). In addition, they manage various information systems so that the needs of managers, staff, and customers are best served. By working collaboratively with various members of their work group, as well as with their customers/clients, MIS professionals are able to play a key role in areas such as information security, integration, and exchange. As an MIS major, you will learn how to design, implement, and use business information systems in innovative ways to increase the effectiveness and efficiency of their organization. There is a common misconception that MIS is all programming. However, programming is just a small part of the MIS curriculum and there are many jobs in MIS that do not utilize programming at all. A large portion of the MIS degree is centered on team work, leadership, project management, customer service, and underlying business theories. These aspects of the degree are that set the MIS professional apart from a computer science specialist.

3.22 Information System in General

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An information system is an organized means of collecting, entering, and processing data and storing, managing, controlling, and reporting information so that an organization can achieve its objectives and goals (Romney et al. 1997:18). This definition of information system shows that an information system has following components. 3.23

Software Tools in the Accounting Process

This section includes the most-frequently used software tools and their most appropriate use. Accountants must be familiar with the software tools because they help the users perform the accounting functions more effectively and efficiently.

3.24 Accounting Software

This software contains the basic accounting function such as input, processing and output. There are two classifications of accounting software as low-end and high-end. Low-end is all-in-one software, which means all of the functions of accounting system are performed within ones software. Therefore, low-end software is used for small companies. On the other hand, high-end software, each accounting function comes in a separate module. Each module checks data for correctness, process it, and updates all relevant accounts. And finally, produces outputs such as documents and reports. Personal computer (PC) based accounting software allows companies to computerize their manual systems and to provide better and timely information. In addition, personal computers have been connected to another personal computer via networks. This allows companies to process indefinite number of transactions occurring at different locations simultaneously within several minutes.

3.25 Income Tax

Tax laws are frequently changing; it is becoming exceedingly difficult to deal with them. Here for, manual tax preparations becoming more and more difficult and time consuming. Fortunately, tax preparation software is currently available for companies. Therefore, instead of processing tax manually, companies can use computer software to perform the same functions. As a result, even complex calculations can be performed via computers is a short period of time.

3.26 Audit
Information technology has also computerized the auditing professions. If auditors perform auditing functions manually, it takes time. However, audit software packages are currently available for auditors.

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4.1 Accounting Information System of Social Islami Bank Limited

SIBL uses both manual and computerized accounting system. In case of current deposit, fixed deposit, savings deposit etc. they use a form Account opening form. Then the Bank records the account in their computerized accounting system (A to Z). In case of long or short-term loan they first collect the information of borrower through a CIB form. Then they inter the information into their computerized accounting system. So we see that they first use the manual accounting system then computerized accounting system.

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On the other hand, in case of foreign currency they use only computerized accounting system.

4.2 Statement of Compliance

The financial statement have been prepared in compliance with the Bangladesh Financial Reporting Standard (BFRS), Bangladesh Accounting Standard (BAS), Bangladesh Bank circulars, and Bank companies Act 1991, the companies Act 1994, securities and Exchange Rules and other rules and regulations as applicable in Bangladesh.

4.3 Basis of preparation of financial statements

The financial statements of the Bank as at 31 December, 2010 have been prepared on going concern basis under the historical cost convention and in accordance with the First Schedule of the Bank companies Act, 1991 as amended by BRPD Circular No.14 dated 25 June, 2003, other Bangladesh Circulars, Bangladesh Financial Reporting Standards (BFRS), Bangladesh Accounting Standard (BAS), the companies Act 1994, the Securities and Exchange Rules 1987, the Listing Regulations of the Stock Exchange and other Laws and Rules applicable in Bangladesh.

4.4 Basis of consolidation

A separate set of record for consolidation of balance sheet and profit & loss account of the branches and head office of the bank are maintained based on which these financial statements have been prepared.

4.5 Use of estimates and judgment

Preparation of the financial statements in conformity with BFRS/BAS requires management to make judgments, estimates and assumptions. These judgments, estimates and assumptions affect the application of accounting policies and the reported amount of assets and liabilities as well as income and expenses in the Financial Statements presented. Actual result may differ from the estimates and assumption made. Estimates and underlying assumptions are reviews on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate in revised and in any future period affected.

4.6 Functional and presentation currency

The Financial Statements have been prepared and presented using BDT the functional currency of SIBL.

4.7 Assets and basis of their valuation

4.7.1 Loans and advances

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Loans and advances are stated in the Balance Sheet at gross basis. General provisions on unclassified & contingent assets, specific provisions for classified loans and interest suspense account there on are shown under other liabilities. Loans and advances are written off to the extent that (i) There is no realistic prospect of recovery and (ii) Against which legal cases are pending as per guidelines of Bangladesh Bank. However, the write off will not reduce the claim against the borrower. Detailed memorandum records for all of such write off accounts are maintained. 4.7.2 Lease finance To comply with Bangladesh Accounting Standard (BAS) No. 17 Lease, the books of account for leasing operation has been prepared under financial method of accounting since assets leased to customers under agreements transfer substantially all the risks and rewards associated with ownership, other than legal title, to the customers and all leases are full payout leases. In accordance with the side standard, the aggregate lease receivables are recorded as gross lease receivables while the excess of gross lease receivables over the total acquisition cost including interest during the period of acquiring the lease equipment constitutes the unearned lease income. At the execution of each lease, a portion of the unearned lease is recognized as revenue income in the period in which it is matured. The balance of the unearned lease income is amortized to revenue on a monthly basis over the primary lease yielding a constant rate of return over the period. 4.7.3 Investments Investments are classified broadly in three categories and accounted for as under: (a) Held to maturity Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the SIBLs management has the intention and ability to hold to maturity. If the bank were to sell other than an insignificant amount of held-tomaturity assets, the entire category would be reclassified as available for sale. (b) Held for trading Investments classified in the category are acquired principally for the purpose of selling or repurchasing in short trading or if designed as such by the management. After initial recognition, investments are measured at fair value and changes are recognized in the profit & loss account as income for the period as per provision of BAS-39 Financial instruments: Recognition and measurement. (c) Sale and repurchase agreement Securities sold subject to repurchase agreement (REPO) are reclassified in the financial statements as pledged assets when the transferee has the right by contract or custom to sell or re-pledge the collateral, the counter-party liability is include in amounts due to other banks,

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deposits from banks, other deposits or deposits due to customers, as appropriate. Securities purchased under agreements to resell (REVRSEREPO) are recorded as loans and advances to other banks or customers, as appropriate. The difference between sale and purchase price is treated as interest and accrued over the life of the agreements using the effective interest method. Value of investment has been determined as follows: Items Applicable accounting value Government treasury bills (HTM) Government treasury bills (HFT) T & T bonds Bangladesh Govt. treasury bonds Prize bond BHBFC-debenture Investments in shares Foreign investment in share and FDR At present value At market value At cost At present value At cost Face value Marked to market At rolling exchange rate on balance sheet date

Fixed assets and depreciation a) All fixed assets are stated at cost less accumulated depreciation. b) Depreciation is charged for the year using straight line method on all fixed assets other than land at the following: Category of fixed assets Land Building Furniture Decoration Mechanical Appliance Motor Car Books Rate of depreciation 2010 Nill 2.5% 10% 10% 20% 20% 10% Rate of depreciation 2009 Nill 2.5% 10% 10% 20% 20% 10%

c) On addition to fixed assets depreciation is charged from the date of acquisition and no depreciation is charged in the year of disposal of the same.

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Non-Banking Assets The bank has shown Non-Banking assets acquired by virtue of decree from artharin-adalat at this market value as required by BRDP circular No.14 dated 25 June, 2033.

4.8 Liabilities and provisions

a) Short term benefits Short term benefits are employees benefits which fall due wholly within twelve month after the end of the period in which the employees render the related service. The banks provide various short term benefits to its like incentive bonus, medical service, leave fare assistance etc. b) Post employment benefits Undefined contribution plans Defined contribution plans are post employment benefit plans under which an entity pays a fixed contribution into a separate entity (Fund) and will have no legal or constructive obligations to pay further. Obligation for contribution to defined contribution pension plans is recognized as an expense in the profit & loss account when they are due. Provident fund The benefits of provident fund are given to the employees of the bank in accordance with the recognized provident fund rules as per section 2(52) of income tax ordinance, 1984. The provident fund was recognized with effect from 31 March, 1987. The fund is operated by a board trustees consisting of six members of the bank. All confirmed employees of the bank contribute 10% of their basic salary as subscription to the fund. The bank also contributes equal amount to the fund. Interest earned from the investments of fund is credited to the members account on yearly basis. Defined benefit plans Defined benefit plans are most employment benefit plans other than defined contributions plans. The defined benefit plans of the bank to pits employees include. Gratuity The bank operates a funded gratuity scheme with effect from 01 July, 2005, which is administrated by a board of trustees consisting of four members. Provision has been made for liabilities under gratuity scheme in compliance with BAS-19 and Bangladesh Bank instruction provided in letter Nodal 1 (Private) /82/2008-257 dated February 20, 2008.

4.9 Provision for taxation

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a) Current Tax Current tax is expected tax payable on taxable income for the year, using tax rates enacted or substantially enacted at the reporting date, and any adjustment payable in respect of previous years. Provision for current income tax has been made @ 42.50% as prescribed in the financial Act, 2010 of the profit made by the bank after considering major taxable allowances and disallowances. b) Deferred Tax Deferred Tax is calculated on the taxable/deductible temporary differences between tax base amount and carrying amount of assets and liabilities as required by Bangladesh Accounting Standard (BAS)-12, Income Taxes. Taxable temporary differences are temporary differences that will result in taxable amounts in determining taxable profit/loss for future periods when the carrying amount of the assets or liability is recorded or settled. Deductible temporary differences are differences that will result in amount that are deductible in determining taxable profit/loss of future periods when the carrying amount of assets or liability is recovers or settled.

4.10 Revenue recognition

The revenues during the year are recognized complied all conditions of revenue recognition as prescribed in Bangladesh Accounting Standard (BAS)-18, Revenue Recognition. Interest income The interest receivable is recognized on actual basis. Interest on loans and advances ceases to be taken into income when such advances cease to be taken into income when such advances are classified. It is then kept in interest suspense account and in memorandum account. Interest on classified advances is accounted for on a cash receipt basis. Investment income Income on investment is recognized on realization & accrual basis where applicable. Fees and commission income Fees and commission income arises on services provided by the bank are recognized on a cash receipt basis. Commission charged to customers on letters of credit and letters of guarantee are credited to income at the time of effecting the transactions. Dividend income on shares Dividend income from shares is recognized during the period in which they are actually received. Stock Dividend is recognized as income in the year in which it is sold.

Interest paid on borrowing and deposits

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Interest paid on borrowing and deposits are calculated on a day basis and recognized on accrual basis. Management and other expenses Expenses incurred by the bank are recognized on actual basis whenever necessary.

4.11 Foreign currencies translation and balance with other banks

Amount of foreign currency are translated in accordance with the principles set forth in Bangladesh Accounting Standard-21, The effects of changes in foreign exchange rate. As per this standard monetary items not denominated in BDT and cash transactions not completed at the reporting date are translated in to BDT using current market rates. Onmonetary items carried at fair value are translated into BDT using current market price at the reporting date and non-monetary items carried at cost are translated using the rate applicable at the time of acquisition. Transaction rates used to translate the items related to income and expenses.

4.12 Internal control and compliance management

Operational loss may arise from error and fraud due to lack of internal control and compliance. Management through internal control and compliance division controls operational produce of the bank. Internal control and compliance division undertakes periodical and special audit of the branches and departments at head office for review of the operation and compliance of statutory requirement. The audit committee of the board subsequently reviews the reports of the internal control and compliance division.

4.13 Earnings Per Share (EPS)

Earnings per share have been calculated in accordance with BAS-33, Earnings per Share which is shown on the face of the profit & loss account. This has been calculated by dividing the net profit after tax by the weighted average number of ordinary shares outstanding as on 31December, 2010. Earnings per share are adjusted for issue of bonus shares for the year 2009.

4.14 Cash Flow statement

Cash flow statement has been prepared in accordance with BAS-7, Cash Flow statements and under the guidelines of Bangladesh Bank BRDP circular no.14 dated 25June, 2003. The cash flow statement shows the structure of changes in cash and cash equivalent during the financial year. It is broken down into operating activities, investing activities and financial activities.

4.15 Statement of changes in equity

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Statement of changes in equity has been prepared in accordance with BAS-1, Presentation of Financial Statement and under the guideline of Bangladesh Bank BRDP circular no.14 dated 25June, 2003. Revaluation of foreign investment has been made in 2010 as per BAS-21, Effect of changes I Foreign Exchange Rates on the other hand, govt. treasury bill and bonds have been valued at market price as per Bangladesh bank BRDP circular no.05 dated 31October, 2005.

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5.1 Findings
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1. SIBL uses both manual and computerized accounting system. 2. Some of the cases SIBL use only computerized accounting system. 3. Internal and external user of SIBL does not know the proper AIS. 4. Technologically SIBL AIS is very good but should be developed. 5. The concept of AIS is new so there is some problem to understand.
6. Theoretically any person can purchase pay order, demand draft and telex transfer by

depositing money and commission. But then person who wants to purchase these should have account in the bank branch. These will discourage customers to transact with the bank. 7. In online banking system customer very satisfy with the new system such as transfer of money, ATM facilities etc. 8. The speeds of internet are very slow. It is the result of our brand problem in all over the country. 9. Some borrowers do not pay their payment timely (according to the ledger).

5.2 Recommendations
It is very difficult to recommend a strong organization like Social Islami Bank Limited, which is performing over 17 years. I am suggesting improving in some areas. So it can perform better in future. SIBL should use AIS then the internal and external users of SIBL properly know the relevant and reliable information. SIBL should try to use more computerized accounting system for the betterment of their banking purposes. Online system is not upgraded they should upgrade it. They should increase use of technology to introduce properly AIS.

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 More training is required to develop the concept of AIS to the employees. AIS will minimize cost and maximize decision making for that SIBL should use AIS in their banking system. Better MIS support is needed for smother operation. But to use MIS firstly SIBL need to use AIS.

5.3 Conclusion
In 2011 Social Islami Bank Limited earned the highest profit since it started 22 nd November, 1995 and achieved strong growth in terms of capital and business size despite uneasy domestic economic condition and global recession. With a strong deposit balance and assets Social Islami Bank Limited run a different way not only in our but also in the abroad. SIBL has been trying to operate its business successfully since 1995. The bank has already developed good image and goodwill among its clients by offering excellent services. As a newly established branch SIBL for serving at its locality with utmost satisfaction of the customer. So, SIBL new branch has to complete with those banks as well as other commercial banks. Today, the whole banking sector is facing a tough competition and challenge. In this situation the bank should try to use technology as like as AIS to increasing its activities and goodwill. Finally I can say that among the entire private bank in Bangladesh, SIBL always providing the efficient service with very affordable price. It is expanding their business all over the world with their business all over the word with their performance rapidly. So the bank should use AIS and MIS in the regular banking activities.

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APPENDIX: A
Questionnaire for Management
Please feel to fill the questionnaire. This is prepared to fulfill academic purpose only. This informations would not disclose anywhere. Name: Designation: Name of the organization: Number of years working in present position: Sex: a) Male B) Female

1. 2. 3. 4. 5. 6.

Does your organization have a different department for using AIS? Does your organization have a idea about the proper operation system through AIS? Does your organization have any professional linked to set the system According up-date Technology Regarding AIS? Dou you believe that employees of SIBL give prompt service to client?

Yes Yes Yes Yes

No No No No No

Do you think that bank employees are efficient to perform their job well? Yes While operating, which one are usually uses? Internal sources External sources Personal Reference Both Which criterias are being emphasized in case of operating AIS? Others

7. 8.

Seniority Merit Both In case of providing professional service which criterias are the most important to you? Previous Academic Personal background A combination 57

experience

Qualification

of all

APPENDIX: B
Abbreviation

ATM AWCD MTDR MSD MMP HS PS MMS MESS MBSS

Automatic Teller Machine Al-Wadiah Current Deposit (AWCD) Account Mudaraba Savings Deposit (MSD) Accoun Mudaraba Term Deposit Receipt (MTDR) Account Mudaraba Monthly Profit Hajj Scheme Mudaraba Special Savings (Pension) Scheme Mudaraba Millionaire Scheme Mudaraba Education Savings Schemes Mudaraba Bashstan Savings Scheme

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Bibliography

Annual report of Social Islami Bank Limited, 2010. Annual report of Social Islami Bank Limited, 2009. Annual report of Social Islami Bank Limited, 2008. Romney Marshall, B and Steinhart Paul, J (2000), Accounting Information System, Pearson Prentice Hall, Ten editions.

Wilkinson J.W, Cerullo M.J, Raval V and wing B.W.O (2000), Accounting Information Systems: Essential Concept and Applications, John willy and Sons. Inc. Fourth editions.

Kimmel Weygandt, Kieso (1999), Accounting Principles, Donald Fowley Eight edition.

Terry Weygandt, Kieso (2000), Intermediate Accounting, Susan Eibe. Web site of SIBL www.siblbd.com Other web site: www.ehow.com www.directoryofschools.com www.scribd.com

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