Accounting Standard in Bangladesh

A delineate ON occupation OF BANGLADESH ACCOUNTING STANDARDS IN melody pic DEPARTMENT OF FINANCE UNIVERSITY OF DHAKA REPORT ON practise OF BANGLADESH ACCOUNTING STANDARDS IN personal credit line FINANCIAL ACCOUNTING I F-103 Submitted To Dr. H. M. Mosarof Hossain Associate Professor de get goingment of pay Faculty of ancestry Administration University of not bad(p) of Bangladesh Submitted By Members of Group-3 Section-B 14th Batch Department of Finance Names Roll no. Upoma Antara Husain 14-052 Zubairia Khan 14-050 Nazmul Ehsan Omiya 14-054 Monowar Hossain 14-008 Md. Rubel Ahmed 14-030 DATE OF incoming 1 May 2008 TABLE OF circumscribe CHAPTER I ? creation ? OBJECTIVES OF APPLYING BAS IN teleph single circuit ? IAS ADDOPTED AS BAS ? SHORT DESCRIPTION OF bass CHAPTER II ? closely PRIME curse particular(a) ? BAS USED IN PBL ? APPLICATION OF rich IN PBL ? IMPORTANCE OF APPLYING BAS IN PBL ? CONCLUSION CHAPTER III ? ANNEXURE ? BIBLIOGRAPHY CHAPTER I INTRODUCTION The rules and guidelines select and implimented worldwide in ex deviseation record retentivity and educational activity forwardness ror maintaining uniformity argon know as transnational bill Stand ard (IAS). IAS were turn upd surrounded by 1973 and 2001 by the board of the world-wide story mensurations perpetration (IASC).Bangladesh report banals (BAS) be follow From IAS by Institute of beneathtake Accountants of Bangladesh (ICAB) for preferred history system system pr compriseices in alone kinds of wrinkle in bangladesh. To exemplarize the news report system with the take of IAS, the ICAB (Institute of hire Accountants of Bangladesh) has been adopting BAS since 1984. The Institute of Chartered Accountants of Bangladesh is a professional accountancy body in the Bangladesh. It is the sole organisation in the Bangladesh with the sort out to award the Chartered Accountant designation.The ICAB up find outd and commensurate m two historic and the senten ce demanding standards in several time BAS is a imbed of standards which get overs the system of score in Bangladesh. In our province Companies disceptationed with Dhaka & Chittagong sprout r exclusivelyying be to prep be their accounts according to the Securities and metamorphose Rules 1987 and the internationalist accounting steps (IAS) as select by the Institute of Chartered Accountants of Bangladesh known as Bangladesh story cadences (BAS). At stick the (TRC) Technical research charge of ICAB screens and mensurates IFRSs and recommends feature IFRS to the council of the ICAB for adoption. ancient fix Limited is ace of the promising cambers in our banking sector. It is listed with Dhaka and Chittagong contain transposition. The mo straighten outary controversys of the wedge be fain under the historical be shape only investments and in unity with the avow Companies Act, 1991, Bangladesh bank Circulars, International Accounting hackneyeds and I nternational pecuniary piece of music meters adoptive by the Institute of Chartered Accountants of Bangladesh as BAS, Companies act 1994, SEC Rules 1987 and separatewise laws and rules applicable in Bangladesh.IAS ADOPTED AS BAS BAS ar create by the ICAB and be found on older IASs ecumenicly those real by the IASC rather than the improved IASs and new IFRSs developed by the IASB. The Technical and Research Committee of the ICAB develops the standards. Adoption requires approval of the ICAB Council. A list of IASs Adopted as BASs is shown below. IAS stochastic variable of IAS BAS Number Remarks Adopted in Bangladesh IAS 1 Presentation of pecuniary 1987 BAS 1 2003 revisions non only considered asseverations by ICAB IAS 2 Inventories 1992 BAS 2 2003 revisions non to that degree considered by ICAB IAS 7 property lean Statements 1992 BAS 7 IAS 8 Accounting Policies, Changes in 1993 BAS 8 2003 revisions non b atomic subprogram 18ly considered Accounting Estimates, and Errors by ICAB IAS 10 Events After the equilibrize Sheet 1999 BAS 10 Date IAS 11 Construction Contracts 1993 BAS 11 IAS 12 Income Taxes 2000 BAS 12 IAS 14 component describe 1997 BAS 14 IAS 16 holding, industrial plant and Equipment 1997 BAS 16 2003 revisions not hitherto considered by ICAB IAS 17 Leases 1998 BAS 17 2003 revisions not yet considered by ICAB IAS 18 Revenue 1993 BAS 18 IAS 19 Employee gathers 2002 BAS 19 2003 and later revisions not yet considered by ICAB IAS 20 Accounting for governing body Grants 1983 BAS 20 and apocalypse of presidency Assistance IAS 21 The Effects of Changes in overseas 1993 BAS 21 2003 and later revisions not yet supercede Rates considered by ICAB IAS 22 Business Combinations 1998 BAS 22 IAS 22 has been superseded by IFRS 3, which has not yet been considered by ICAB IAS 23 Borrowing be 1993 BAS 23 IAS 24 Related Party Disclosures 1994 BAS 24 2003 revisions not yet considered by ICAB IAS 25 Accounting for investment fundss 1987 BAS 25 IAS 25 has been superseded by IAS 39, which has not yet been considered by ICAB IAS 26 Accounting and Reporting by 1987 BAS 26 hideaway Benefit Plans IAS 27 amalgamated and ramify 1998 BAS 27 2003 revisions not yet considered fiscal Statements by ICAB IAS 28Investments in Associates 1998 BAS 28 2003 revisions not yet considered by ICAB IAS 29 pecuniary Reporting in no(prenominal) yet Adopted Hyperinflationary Economies IAS 30 Disclosures in the Financial 1990 BAS 30 IAS 30 has been superseded by IFRS Statements of confides and Similar Financial 7 (effective 2007), which has not Institutions yet been considered by ICAB IAS 31 interests In Joint opines 1999 BAS 31 2003 revisions not yet considered by ICAB IAS 32 Financial Instruments Disclosure zero(prenominal) yet follow and Presentation IAS 33 wampum Per region 1999 BAS 33 2003 revisions no t yet considered by ICAB IAS 34 meantime Financial Reporting 1998 BAS 34 IAS 35 Discontinuing Operations 1998 BAS 35 IAS 35 has been superseded by IFRS 5, which has not yet been considered by ICAB IAS 36 balk of As set ups 1998 BAS 36 2004 revisions not yet considered by ICAB IAS 37 Provisions, particular on(p) Liabilities1998 BAS 37 1998 and depending on(p) on(p) Assets IAS 38 Intangible Assets 1998 BAS 38 2004 revisions not yet considered by ICAB IAS 39 Financial Instruments comprehension nary(prenominal) yet adopted and meter IAS 40 Investment Property 2000 BAS 40 2003 revisions not yet considered by ICAB IAS 41 Agriculture Not yet adopted SHORT DESCRIPTION ON BAS BAS 1 Presentation of Financial StatementsThis threadb are ranges the basis for presentation of superior general purpose fiscal teachings to run into comparability both with the entitys fiscal instructions of previous expirations and with the mo clamsary s tatements of opposite entities. It sets out over any requirements for the presentation of fiscal statements, guidelines for their structure and minimum requirements for their susceptibility. A stark(a) set of pecuniary statements comprises (a) a statement of fiscal position as at the end of the hitch (b) a statement of comprehensive income for the blockage (c) a statement of changes in equity for the period (d) a statement of gold flows for the period e) notes, comprising a summary of significant accounting policies and oppositewisewise explanatory culture and (f) a statement of fiscal position as at the beginning of the earliest comparative period when an entity applies an accounting policy retrospectively or makes a retrospective restatement of items in its monetary statements, or when it reclassifies items in its fiscal statements. BAS 2 Inventories The accusing of this banal is to set up the accounting word for inventories. A base sequel in accounting for in ventories is the core of approach to be accept as an summation and carried forward until the related grosss are know. This precedent declare oneselfs counsel on the determination of make up and its subsequent realization as an expense, including all(prenominal) write-down to net realisable respect. It also nominates guidance on the cost formulas that are employ to assign be to inventories. Inventories shall be thrifty at the lower of cost and net realisable value. BAS 7 interchange meld StatementsThe documental of this meter is to require the planning of culture round the historical changes in specie and specie equivalents of an entity by means of a statement of immediate payment flows which classifies immediate payment flows during the period from operating, investing and financing activities. BAS 8 Accounting Policies, Changes in Accounting Estimates, and Errors The design of this measuring stick is to range the criteria for selecting and changing accounting policies, unneurotic with the accounting intervention and manifestation of changes in accounting policies, changes in accounting estimates and corrections of errors. The tired is mean to enhance the relevancy and dependability of an entitys financial statements and the comparability of those financial statements over time and with the financial statements of another(prenominal) entities. BAS 10 Events After the agreement Sheet Date The neutral of this pattern is to rank a) When an entity should adjust its financial statements for offsprings subsequently the inform period and (b) The apocalypses that an entity should give about the pick up when the financial statements were authorized for write out and about events subsequently the insurance coverage period. The Standard also requires that an entity should not prepare its financial statements on a going fretfulness basis if events afterward the account period indicate that the going concern sel f-assertion is not appropriate. BAS 11 Construction Contracts The butt of this Standard is to impose the accounting intervention of tax income and cost partnerd with formulation contracts. Beca utilize of the record of the activity undertaken in construction contracts, the date at which the contract activity is entered into and the date when the activity is fattend usually happen into different accounting periods.Therefore, the primary issue in accounting for construction contracts is the assignation of contract revenue and contract costs to the accounting periods in which construction cypher is performed. This Standard shall be delectation in accounting for construction contracts in the financial statements of contractors. BAS 12 Income Taxes The aim of this Standard is to prescribe the accounting treatment for income taxes. For the purposes of this Standard, income taxes intromit all domestic and extraneous taxes which are based on taxable kales. Income taxes also include taxes, such as withholding taxes, which are account payable by a subsidiary, associate or vocalize proceed on distributions to the taradiddle entity.The chief issue in accounting for income taxes is how to account for the current and future tense tax consequences of (a) the future recovery ( drop downment) of the carrying total of summations (liabilities) that are recognised in an entitys agreement yellow journalism and (b) Trans dos and other events of the current period that are recognize in an entitys financial statements. BAS 16 Property, coiffure and Equipment The nonsubjective of this Standard is to prescribe the accounting treatment for property, plant and equipment so that users of the financial statements can discern education about an entitys investment in its property, plant and equipment and the changes in such investment. The principal issues in accounting for property, plant and equipment are the reference of the hyperkinetic syndromeitions, t he determination of their carrying amounts and the disparagement charges and detriment breathing outes to be recognized in likeness to them. BAS 17 LeasesThe physical object of this Standard is to prescribe, for lessees and lessors, the appropriate accounting policies and divine revelation to book in relation to haves. The potpourri of plights adopted in this Standard is based on the utmost to which risks and rewards incidental to proprietorship of a contractd asset lie with the lessor or the lessee. A lease is classified as a finance lease if it transfers intimately all the risks and rewards incidental to ownership. A lease is classified as an operating lease if it does not transfer comfortably all the risks and rewards incidental to ownership. BAS 18 Revenue The primary issue in accounting for revenue is determining when to recognize revenue.Revenue is recognized when it is probable that future stinting returns allow for flow to the entity and these wellbeings can be metric reliably. This Standard identifies the circumstances in which these criteria will be met and, therefore, revenue will be recognized. It also provides practical guidance on the application of these criteria. Revenue is the gross influx of economic benefits during the period arising in the wrinkle of the modal(a) activities of an entity when those inflows result in increases in equity, other than increases relating to donations from equity participants. This Standard shall be devote in accounting for revenue arising from the following proceeding and events (a) the trade of cheeseparings (b) the get of gos and c) the use by others of entity assets tame interest, royalties and dividends. BAS 19 Employee Benefits Employee benefits are all forms of devotion give by an entity in commute for assistance rendered by employees. The objective of this Standard is to prescribe the accounting and disclosure for employee benefits. The Standard requires an entity to recogn ize (a) a liability when an employee has provided service in win over for employee benefits to be paying(a) in the future and (b) An expense when the entity consumes the economic benefit arising from service provided by an employee in supersede for employee benefits. BAS 20 Accounting for organisation Grants and Disclosure of Government AssistanceThis Standard shall be applied in accounting for, and in the disclosure of, governance grants and in the disclosure of other forms of presidency assistance. Government grants are assistance by politics in the form of transfers of resources to an entity in translate for past or future meekness with definite conditions relating to the operating activities of the entity. They exclude those forms of government assistance which cannot reasonably have a value placed upon them and transactions with government which cannot be distinguished from the normal merchandise transactions of the entity. Government assistance is action by governm ent designed to provide an economic benefit specific to an entity or range of entities walk under certain criteria.Government assistance for the purpose of this Standard does not include benefits provided only indirectly through action affecting general trading conditions, such as the grooming of infrastructure in development areas or the imposition of trading constraints on competitors. BAS 21 The Effects of Changes in unusual Exchange Rates An entity may carry on outside activities in two ways. It may have transactions in international currencies or it may have contradictory trading operations. In addition, an entity may present its financial statements in a orthogonal specie. The objective of this Standard is to prescribe how to include conflicting currency transactions and foreign operations in the financial tatements of an entity and how to translate financial statements into a presentation currency. The principal issues are which exchange rate(s) to use and how to reveal the make of changes in exchange rates in the financial statements. BAS 22 Business Combinations The objective of this standard is to prescribe the accounting treatment for business combinations (both learnednesss and, in exceptional instances in which the acquirer cannot be identified labor union of interests). It provides guidance on the classification of a business combination, which includes whether an acquirer can be identified, and whether fateholders of the combining entities contend mutually in the risks and benefits of the combined entity. BAS 23 Borrowing Costs Borrowing Costs Borrowing costs that are directly attributable to the achievement, construction or production of a qualifying asset form part of the cost of that asset. other borrowing costs are recognized as an expense BAS 24 Related Party Disclosures The objective of this Standard is to attend that an entitys financial statements cease the disclosures necessary to draw attention to the happenin g that its financial position and improvement or privation may have been touch on by the existence of related parties and by transactions and outstanding balances with such parties. BAS 26 Accounting and Reporting by solitude Benefit PlansThis Standard shall be applied in the financial statements of loneliness benefit plans where such financial statements are watchful. Retirement benefit plans are arrangements whereby an entity provides benefits for employees on or after termination of service (either in the form of an annual income or as a lump sum) when such benefits, or the contributions towards them, can be rigid or estimated in advance of privacy from the pabulum of a document or from the entitys practices. The financial statements of a defined contribution plan shall contain a statement of net assets available for benefits and a description of the patronage policy. BAS 27 Consolidated and Separate Financial StatementsThe objective of BAS 27 is to enhance the releva nce, reliability and comparability of the information that a heighten entity provides in its separate financial statements and in its consolidated financial statements for a root word of entities under its control. The Standard specifies (a) the circumstances in which an entity essential consolidate the financial statements of some other entity (being a subsidiary) (b) the accounting for changes in the take of ownership interest in a subsidiary (c) the accounting for the exit of control of a subsidiary and (d) the information that an entity must disclose to enable users of the financial statements to evaluate the nature of the relationship between the entity and its subsidiaries. BAS 28 Investments in Associates This Standard shall be applied in accounting for investments in associates.However, it does not curb to investments in associates held by (a) venture gravid organizations, or (b) Mutual parentages, inninging block trusts and similar entities including investment -linked insurance memorys. BAS 30 Disclosures in the Financial Statements of margins and Similar Financial Institutions The objective of BAS30 is to prescribe appropriate presentation and disclosure standards for banks and similar financial institutions as a supplement of the requirements of other standards. It provides the Requirement for classification of items in the income statement and balance cruise by their nature, and for the balance tack in order of relative liquidity. Identifies the income statement and balance sheet line items requiring disclosure. ? Additional disclosure requirements, including concentration of assets, liabilities and off-balance items, losses on loans and advances, and general banking risks. BAS 31 use ups in Joint Venture This Standard shall be applied in accounting for interests in joint ventures and the report of joint venture assets, liabilities, income and expenses in the financial statements of ventures and investors, regardless of the st ructures or forms under which the joint venture activities take place. However, it does not apply to ventures interests in jointly controlled entities held by 1. (a) venture nifty organizations, or 2. b) Mutual funds, unit trusts and similar entities including investment-linked insurance funds. BAS 33 Earnings Per carry on The objective of this Standard is to prescribe principles for the determination and presentation of boodle per part, so as to improve performance comparisons between different entities in the same reporting period and between different reporting periods for the same entity. The focus of this Standard is on the denominator of the kale per consider calculation. This Standard shall be applied by entities whose ordinary shares or likely ordinary shares are publi shrieky traded and by entities that are in the regale of issuing ordinary shares or potential ordinary shares in public market places.An entity that discloses loot per share shall calculate and di sclose honorarium per share in accordance with this Standard. Bas 34 Interim Financial Reporting The objective of this Standard is to prescribe the minimum content of an interim financial report and to prescribe the principles for recognition and measurement in complete or condensed financial statements for an interim period. apropos and legitimate interim financial reporting improves the ability of investors, creditors, and others to understand an entitys capacity to generate earnings and notes flows and its financial condition and liquidity. This Standard applies if an entity is required or elects to publish an interim financial report in accordance with International Financial Reporting Standards.Interim financial report means a financial report containing either a complete set of financial statements (as described in IAS 1 Presentation of Financial Statements (as revised in 2007)) or a set of condensed financial statements (as described in this Standard) for an interim peri od. Interim period is a financial reporting period shorter than a full financial yr. BAS 35 Discontinuing Operations The objective of this standard is to enhance the ability to make financial projections by segregating information about discontinuing operations from information about continuing operations. BAS 35 does not establish any recognition or measurement principles in relation to discontinuing operations-these are dealt with under other BAS.In particular, BAS 35 provides guidance on how to apply BAS 36, Impairment of Assets, and BAS 37, Provisions Contingent Liabilities and Contingent Assets, to discontinuing operations. BAS 36 Impairment of Assets The objective of this Standard is to prescribe the procedures that an entity applies to ensure that its assets are carried at no more than their recoverable amount. An asset is carried at more than its recoverable amount if its carrying amount exceeds the amount to be vulcanised through use or sale of the asset. If this is the case, the asset is described as impaired and the Standard requires the entity to recognize an impairment loss. The Standard also specifies when an entity should reverse an impairment loss and prescribes disclosures. BAS 37 Provisions, Contingent Liabilities and Contingent AssetsThe objective of this Standard is to ensure that appropriate recognition criteria and measurement bases are applied to formulations, contingent liabilities and contingent assets and that sufficient information is tell in the notes to enable users to understand their nature, time and amount. IAS 37 prescribes the accounting and disclosure for all formulations, contingent liabilities and contingent assets, except (a) Those resulting from executory contracts, except where the contract is onerous. Executory contracts are contracts under which incomplete party has performed any of its obligations or both parties have partially performed their obligations to an follow extent (b) Those covered by another(p renominal) Standard. BAS 38 Intangible AssetsThe objective of this Standard is to prescribe the accounting treatment for non fleshly assets that are not dealt with specifically in another Standard. This Standard requires an entity to recognize an intangible asset if, and only if, specified criteria are met. The Standard also specifies how to measure the carrying amount of intangible assets and requires specified disclosures about intangible assets. An intangible asset is an identifiable non-monetary asset without physical substance. BAS 40 Investment Property The objective of this Standard is to prescribe the accounting treatment for investment property and related disclosure requirements.Investment property is property (land or a buildingor part of a buildingor both) held (by the owner or by the lessee under a finance lease) to earn rentals or for capital appreciation or both, rather than for (a) use in the production or ply of goods or function or for administrative purposes or (b) barter in the ordinary course of business. OBECTIVES OF USING BAS IN BUSINESS Standardized Accountings The objective of applying BAS in business is to regularise the accounting issues and preparation of financial statements. International Recognition To keep congruity with International Business the use of International Accounting Standards adopted as BAS is crucial. It helps the businesses to infer international recognition. Maintaining UniformityAccounting standards are kept up(p) in order to ensure uniformity in recording accounts and preparing financial statements within the businesses both in country and abroad. Ensuring Transparency An important objective of applying BAS is to ensure proper disclosure of necessary information in the financial statements. It provides foil in the statements. Providing Reliability The application of BAS provides reliability and consistency in the accounting record keeping and financial statements to the outside parties. CHAPT ER II pic ABOUT PRIME BANK LIMITED The ancient Bank Limited (the Bank) was coordinated as the public limited beau monde in Bangladesh under companies Act, 1994.It commenced its banking business with one branch from April17, 1995 under the license issued bi Bangladesh Bank. Presently the Bank has 61 branches all over Bangladesh and a booth primed(p) at Dhaka Club, Dhaka. The Bank had no overseas branches as at 31 celestial latitude 2007. The Bank went for Initial ordinary Offerings in 1999 and its share is listed with Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited as a in public traded company for its general class of shares. mountain The vision of the Bank is to be the scoop out Private Commercial Bank in Bangladesh in impairment of energy, capital adequacy, asset quality, adept management and meshingability having immobile liquidity. MISSIONThe mission of the Bank is to build strand Bank Limited into an efficient, market driven, customer focused in stitution with good corporate governance structure. Continuous improvement in the business policies, procedure and efficiency through integration of technology at all levels. STRATEGIC PRIORITY The strategic priority of the Bank is to have keep up growth, broaden and improved range of products and service in all areas of banking activities with the aim to add increased value to share holders investments and gap highest possible benefits to the customers. CORE VALUE For customers It refers to establish most caring Bank by providing the most courteous and efficient operate in every area of our business. For employees It promotes eudaimonia of the employees. For shareholders It ensures fare return on the investments of the shareholders through generating stable profit. For the community As a socially responsible corporate entity the Bank maintains close adherence to national policies and objectives. picBAS FOLLOWED IN PRIME BANK The Institute of Chartered Accountants of Bangla desh (ICAB) is the sole authority for adoption of International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS). While preparing the financial statements, Prime Bank allied most of IAS and IFRS as adopted by ICAB. Details are minded(p) below Name of the BAS BAS no stipulation Presentation of Financial Statements 1 utilise Stationeries 2 apply Cash blend Statements 7 employ Accounting Policies, Changes in Accounting Estimates and Errors 8 utilize Events after the symmetry Sheet Date 10 utilise Construction Contracts 11 N/A Income Taxes 12 Applied portion Reporting 14 Applied Property, Plant and Equipment 16 Applied Leases 17 Applied Revenue 18 Applied Employee Benefits 19 Applied Accounting for Government Grants and Disclosure of Government Assistance 20 N/A The Effects of Changes in immaterial Exchange Rates 21 Applied Borrowing Costs 23 Applied Related Party Disclosures 24 Applied Acc ounting for Investments 25 Applied Accounting and Reporting by Retirement Benefit Plans 26 Applied Consolidated and Separate Financial Statements 27 Applied Investments in Associates 28 N/A Disclosures in the Financial Statements of Banks and similar Financial Institutions 30 Applied engages in Joint Ventures 31 N/A Earnings per share 33 Applied Interim Financial Reporting 34 Applied Impairment of Assets 36 Applied Provisions, Contingent Liabilities and Contingent Assets 7 Applied Intangible Assets 38 N/A Investment Property 40 Applied Agriculture 41 N/A Name of the BFRS BAS no Status Share Based fee 2 N/A Business Combinations 3 N/A Non-current Assets Held for Sale and Discontinued Operations 5 N/A Exploration for and Evaluation of mineral Resources 6 N/A *N/A=not applicable pic APPLICATION OF BAS IN PRIME BANK LIMITED For the convenience of discussion we are video display the effect of some important BASs in record ke eping and accounting of Prime Bank Limited. BAS No. 1 Preparation of Financial Statements The financial statements of the bank are prepared in accordance with BAS-1 to give a fair think of the state of the Banks affairs and of the results of the operations and cash flows.The financial reports for the yr ended in 31 December 2007 are given as annexure for viewing. BAS No. 7 Cash Flow Statement Cash flow statement has been prepared in accordance with the BAS-7 Cash Flow Statement under direct method acting as recommended in BRPD Circular No. 14, dated June 25 2003 issued by the Banking canon and Policy Department of Bangladesh Bank. BAS No. 12 Income Taxes Provision for current income tax has been make 45% as prescribed in the Finance Act, 2007 on the accounting profit do by the Bank after considering some of the add backs to the income and disallowances as wasting disease as per income tax laws in conformance with BAS-12 Income Taxes. BAS No. 16 Property, Plant and Equipme nt every last(predicate) fixed assets are stated at cost less accumulated depreciation as per BAS-16 Property, Plant and Equipment. The cost of acquisition of an asset comprises its corrupt price and any directly attributable cost of delivery the asset to its working condition for its intended use inclusive of inward freight, duties and non-refundable taxes. BAS No. 17 Leases Leases are classified as finance leases whenever the terms of the lease transfers substantially all the risks and rewards of ownership to the lessee as per BAS-17 Leases. ? The Bank as lessor Amount due from lessees under finance leases are recorded as receivables at the amount of the Banks net investment in the leases. The Bank as lessee Assets held under finance lease s are recognized as assets of the Bank at the date of acquisition or if lower, at the present value of the minimum lease payments. BAS No. 18 Revenue ? Interest income In terms of the provisions of the BAS-18 Revenue, the interest income is recognized on accruement basis. ? Investment income Interest income on investments is recognized on accrual basis. ? Fees and commission income Fees and commission income arises on services provided by the Bank are recognized on a cash put across basis. ? Dividend income on share Dividend income on share is recognized during the period in which declare and ascertained. Interest gainful and other expenses in Conventional Banking In terms of the provision of the BAS-1 Presentation of Financial Statements interest and other expenses are recognized on accrual basis. ? improvement salaried on deposits in Islamic Banking Profit paid to mudaraba depositors is recognized on accrual basis as per provisional rate. BAS No. 19 Employee benefits The retirement benefits accrued for the employees of the Bank as on reporting date have been accounted for in accordance with the provisions of BAS-19, Employee Benefit. Bases of enumerating the retirement benefit schemas operated by the Bank ar e outlined below ? Provident fund Provident fund benefits are given to the permanent employees f the Bank in accordance with Banks service rules. All confirmed employees of the Bank are contributing 10% of their grassroots wages as subscription to the fund. The Bank also erects equal amount of the employees contribution. ? Gratuity fund actuarial valuation of gratuity shunning had been made to assess the adequacy of the liabilities provide for the scheme as per BAS-19, Employee Benefits. ? Welfare fund Prime Banks employees welfare fund is subscribed by monthly contribution of the employees. The Bank also contributes to the Fund from time to time. Disbursement from the fund is done as per rules for employees welfare fund. ? Incentive giftPrime Bank started an incentive support scheme for its employees. 10% of net profit after tax is given to the employees in every course as incentive bonus. This bonus amount is being distributed among the employees based on their performance. BAS No. 21 The Effects of Changes in Foreign Exchange Rates Foreign currency transactions are born-again into equivalent Taka using the ruling exchange rates on the dates of respective transactions as per BAS-21, The Effects of Changes in Foreign Exchange Rates. Foreign currency balances held in US sawhorse are converted into Taka at weighted number rate of inter-bank market as determined by Bangladesh Bank on the windup date of every month.Balances held in foreign currencies other than US Dollar are converted into equivalent US Dollar at buying rates of revolutionary York closing of the priviou7s day and converted into Taka equivalent. BAS No. 33 Earnings per Share prefatorial earnings per share have been measured in accordance with BAS-33, Earnings per Share which has been shown on the face of the profit and loss account. This has been calculated by dividing the basic earnings by the weighted comely number of ordinary shares are standing during the grade. The bonus sha res issued during the year 2007 were treated as if they had been in issue in previous year also (declared for 2006 result). Hence, in computing the basic earning per share of 2006, the total number of shares including the say bonus shares has been considered as weighted average no. f shares outstanding during the year 2006 as per BAS-33, Earning per Share. BAS No. 37 Provisions, Contingent Liabilities and Contingent Assets A provision is recognized in the balance sheet when the Bank has a legal or constructive obligation as a result of a past event and it is probable that an outflow of economic benefit will be required to settle the obligations, in accordance with the BAS 37, Provisions contingent Liabilities and Contingent Assets. pic IMPORTANCE OF APPLYING BAS IN PBL long-suffering By The Rules Adopted BASs are enforceable for listed companies by SEC rules. So proper application of BAS in PBL is maintained to abide by the regulations of the nation. Guideline For Accounting Iss ues BAS provides guidelines on different accounting issues to contribute to a common strategy and material of reference for accountancy development and ensures luculent financial reporting, in accordance with sound corporate governance. Presenting Relevant & Reliable nurture Applying BAS in the record keepings and preparation of financial statements makes the accounting information relevant and reliable to all involved parties. Assistance in International Business Application of BAS is important for keeping up to the International Standards which is important for International business. Co-operation Between Different PartiesThe use of BAS helps promote co-operation between governments, the accountancy and other professions, the international financial institutions, regulators, standard setters, capital providers and issuers. CONCLUSION In the world of globalisation it is essential for businesses around the world to standardize the accounting record keepings and preparation of financial statements. The government of Bangladesh has made the International Accounting Standards adopted by Institute of Chartered Accountants of Bangladesh as Bangladesh Accounting Standards enforceable for all listed companies in order to ensure transparency and standard in accounting issues. wish well other listed companies of our country Prime Bank Limited record their accounts and prepare their financial statements in compliance with these standards.The effects of these standards provide guidance and reliability in the accounting information. CHAPTER III ANNEXURE pic Balance Sheet As at 31 December 2007 2007 2006 proportion AND ASSETS Taka Taka Cash In hand (including foreign currencies) 663,028,189 452,560,474 Balance with Bangladesh Bank and its agent bank(s) (including foreign currencies) 4,755,788,872 3,662,426,602 5,418,817,061 4,114,987,076 Balance with other banks and financial institutionsIn Bangladesh 1,625,581,391 627,964,960 Outside Bangladesh 791,887,088 485, 749,435 2,417,468,479 1,113,714,395 currency at call and short observe 1,490,000,000 Investments Government 12,090,285,095 7,673,700,299 new(prenominal)s 607,735,533 170,682,648 12,698,020,628 7,844,382,947 Loans and advances/investments Loans, cash impute, overdrafts, etc 53,814,967,656 41,307,504,065 Bills purchased and discounted ,868,053,856 3,702,713,983 57,683,021,512 45,010,218,048 Fixed assets including premises, furniture 660,490,066 412,107,309 Other assets 710,613,052 914,107,309 Non-banking assets wide-cut assets 79,588,430,798 60,899,475,793 2007 2006 LIABILITIES AND CAPITAL Taka Taka Liabilities Borrowing from other banks, financial institutions 390,869,490 345,944,757 Deposits and other accounts reliable/ al-wadeeah current deposits 10,590,463,357 8,261,264,165 Bills payable 1,144,540,968 528,231,748 Savings bank 6,027,260,878 4,125,622,204 Term deposits 52,750,109,722 41,808,962,467 mail carrier certificate of deposit Other deposits 70,512,374,92 5 54,724,080,584 Other liabilities 3,411,909,021 1,969,561,728 sum liabilities 74,315,153,436 57,039,587,069 Capital/ Shareholders equity pay capital 2,275,000,000 1,750,000,000 Statutory bind 1,873,543,597 1,404,170,652 limited review gain 2,723,913 Other reserve retain earnings 1,112,009,852 705,718,072 totality Shareholders equity 5,273,277,362 3,859,888,724 Total liabilities and Shareholders equity 79,588,430,798 60,899,475,793 Balance Sheet as at 31 December 2007 pic 2007 2006 Taka Taka OFF-BALANCE rag ITEMS Contingent liabilitiesAcceptances and endorsements Letters of guarantee 10,480,381,241 9,476,314,713 irrevocable letters of credit 21,193,628,862 17,392,748,116 Bills for collection 1,414,716,406 1,060,486,687 Other contingent liabilities 33,088,726,509 27,929,549,516 Other commitments Documentary credits Forward assets purchased undrawn ote issuance Undrawn formal standby facilities Liabilities against forward purchase and sale Others 33,0 88,726,509 27,929,549,516 Other memorandum items apprize of travellerscheques in hand 141,383,952 14,284,764 Value of Bangladesh Patras in hand 1,348,897,500 346,193,975 1,490,281,452 360,478,739 Total 34,579,007,961 28,290,028,255 Profit and waiver Account For the year ended 31 December 2007 pic 2007 2006 Taka TakaInterest income 7,170,099,616 5,198,790,368 Interest paid on deposits (5,226,592,564) (3,698,441,036) terminate interest 1,903,507,052 1,500,349,332 Investment income 1,294,205,056 419,496,059 Commission, exchange 1,198,942,404 998,117,247 Other operating income 419,555,862 314,073,525Total operating income (A) 4,816,210,375 3,232,036,163 Salaries and allowances 725,285,435 561,930,122 Rent, taxes and insurances 159,529,399 113,987,335 Legal expenses 24,728,362 4,951,307 Postage, stamp 60,999,650 47,690,052 letter paper 121,691,050 63,382,686 Managing Directors salary 9,131,448 6,400,000 Directors fees 2,224,444 2,734,300 Auditors fees 791,725 570,990 Charges on loan losses Depreciation and repair of Banks assets 102,185,026 71,657,509 Other expenses 352,779,110 227,768,616 Total operating expenses (B) 1,559,345,650 1,101,072,827Profit/ (Loss) before provision(c=A-B) 3,256,864,725 2,130,963,336 Provision for loans/investments Specific provision (350,000,000) (210,000,000 General provision (350,000,000) (180,000,000) Provision for off-balance sheet items (210,000,000) (910,000,000) (390,000,000) Provision for diminution Other provision Total provision (D) (910,000,000) (390,000,000) Total profit / (loss) before taxes(C-D) 2,346,864,725 1,740,963,336 Provision for taxation Current tax (1,015,000,000) (592,362,815) Deferred tax 68,800,000 96,709,995 Net profit after taxation 1,400,664,725 1,051,890,526 maintained earnings (previous) 180,718,073 2,020,213 1,581,382,073 1,053,910,739 AppropriationsStatutory reserve 469,372,945 348,192,667 General reserve 469,372,945 348,192,667 Retained surplus 1,112,009,852 705,718,072 Earnings per share (EPS) 61. 57 46. 24 Cash Flow Statement For the year ended 31 December 2007 pic 2007 2006 Taka Taka A) Cash flows from operating activitiesInterest receipts in cash 7,076,601,586 5,616,509,362 Interest payments (5,266,592,564) (3,698,441,036) Dividends receipts 7,976,958 1,777,066 Fees and commission receipts in cash 1,198,942,404 998,117,247 Recoveries of loans 415,867 Cash payments to employees (729,416,883) (596,830,122) Cash payments to suppliers (286,567,522) (175,315,699) Income taxes paid (476,148,788) (590,139,079) Receipts from other operating activities 419,555,862 314,067,381 Payments for other operating activities (470,041,003) (296,680,802)Cash generated from operating activities 1,474,725,917 1,573,064,318 accession/ (decrease) in operating assets and liabilities Statutory deposits bargain for of trading securities (1,197,259,262) (1,161,365,969) Loans and advances to other banks Loans and advances to customers (12,672,803,463) (13,094,105,540) Ot her assets (3,796,358,897) 2,494,489,750) Deposits from other banks /borrowings 62,890,500 (490,439,000) Deposits from customers 15,171,985,121 18,833,626,261 Others liabilities accounts of customers 616,309,220 (140,262,287) Trading liabilities Other liabilities 1,437,147,293 (177,440,778) (378,089,488) 1,275,522,937 Net cash from operating activities 1,096,636,429 2,848,587,255 B) Cash flows from operating activitiesDebentures 4,932,282 5,000,000 outcome from sale of securities Payments for purchase of securities (430,320,723) (58,856,689) Purchase of property (333,719,898) (98,473,598) Payment against lease obligation (2,785,500) (1,995,468) riposte from sale of property 277,045 325,900 Net cash used in investing activities (761,616,794) (153,999,855)C) Cash flows from financing activities Dividend paid Net cash from financing activities D) Net increase/(decrease) in cash and cash equivalents 335,019,635 2,694,587,400 E) Effects of exchange rate F) Cash and cash equivalents at beginning of the year 7,468,239,215 4,773,651,851 G) Cash and cash equivalents at the end of the year 7,803,258,850 7,468,239,215 Cash and cash equivalents at the end of the yearCash in hand 663,028,189 452,560,474 Balance with Bangladesh Bank 4,755,788,872 3,662,426,602 Balance with other banks 2,382,784,489 1,061,064,639 Money at call and short notice 1,490,000,000 Reverse repo 800,000,000 Prize bonds 1,657,300 2,187,500 7,803,258,850 7,468,293,215 Statement of Changes in Equity Particulars Paid up capital Statutory reserve Revaluation Retained earnings Total (Taka) (Taka) gain/loss (Taka) (Taka) (Taka) Balance as at 1 January 2007 1,750,000,000 1,404,170,652 705,718,072 3,859,888,724 Changes in accounting policy - - - - - Restated Balance 1,750,000,000 1,404,170,652 705,718,072 3,859,888,724 bare on revaluation of - - - - - properties Surplus of investments - - 12,723, - 12,723,913 913 Cur rency translation differences - - - - - Net gains and losses(Unrecognized) - - 12,723, - - 913 Net profit for the year - - 1,400,664, 1,400,664,725 Dividends - 725 Issue of share capital 525,000,000 (525,000, - - 000) Appropriation - - - - - - 469,372,945 (469,372, - - 945) Balance as at 31 December 2007 2,275,000,000 1,873,543,597 12,723,