ETHIOPIAN INSTITUTE OF

FINANCIAL STUDIES
Bank Accounting

Friday, June 21, 2024 ETHIOPIAN INSTITUTE OF FINANCIAL STUDIES 1

06/21/2024 ETHIOPIAN INSTITUTE OF FINANCIAL STUDIES 2
 Ethiopian Institute
of Financial Studies Bank Accounting

06/21/2024 ETHIOPIAN INSTITUTE OF FINANCIAL STUDIES 3

 Ethiopian Institute
of Financial Studies
LET’S GET TO KNOW
EACH OTHER
• Pair up yourself first
• Do Short interviews to your partner about:
o Name
o Field of study
o Your position
o Accounting and Finance related Practical Experience
o Career aspiration in CBE
• Introduce each other to the entire participant
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 Bank Accounting Training

06/21/2024 ETHIOPIAN INSTITUTE OF FINANCIAL STUDIES 5

 Ethiopian Institute
of Financial Studies Bank Accounting

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 Ethiopian Institute
of Financial Studies Bank Accounting
Objective of the Training

At the end of this Course the trainee will be

 Define the main objectives of Accounting and IFRS Concepts

 List the steps of the Accounting cycle

Describe the rule of Debit and Credit to record Transaction

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 Ethiopian Institute
of Financial Studies Bank Accounting
Objective of the Training
Analyze The most frequently used internal Account in Bank
branch Operation
Journalize the most frequently transaction in Bank Branch
Operation

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 Ethiopian Institute
of Financial Studies Training Content

 The Main Objectives of Accounting

 IFRS Concepts

 Accounting Cycle

 the rule of Debit and Credit to record Transaction

 Internal Account and Entry Management

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 Ethiopian Institute
of Financial Studies Introduction
 Accounting is commonly known as the "language of
business".
 It is a means through which information about a
business entity is communicated. Through the financial
statements
 the end-product reports in accounting:- it delivers
information to different users to help them in making
decisions

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 Ethiopian Institute The Main objective of
of Financial Studies
Accounting

- keep Systematic
-Ascertain
Record
Profitability -Compliance of
-Ascertain the Law
-Assist in
financial position
Decision-Making
of the business

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 Ethiopian Institute
The Main objective of
of Financial Studies
Accounting

To Keep Systematic Records

 Accounting is done to keep systematic record of
financial transactions.
 The primary objective of accounting is to help us
collect financial data and to record it systematically
to derive correct and useful results of financial
statements.

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 Ethiopian Institute The Main objective of
of Financial Studies
Accounting

To Ascertain Profitability

 With the help of accounting, we can evaluate the profits and
losses incurred during a specific accounting period.
 With the help of a Trading and Profit & Loss Account, we
can easily determine the profit or loss of a firm.

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 Ethiopian Institute
The Main objective of
of Financial Studies
Accounting

To Assist in Decision-Making:

 To take decisions for the future, one requires
accurate financial statements.
 Thus, accounting gives you the platform to plan for
the future with the help of past records
 Bank’s Decision maker uses different financial
reports a bank organ to monitor their performance.

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 Ethiopian Institute
The Main objective of
of Financial Studies
Accounting

To fulfill compliance of Law:

 Accounting helps in running a business in compliance with
the law.
 Bank uses its Accounting information to comply with
different local and international rules and regulations like,
payment of taxes , Financial Reporting Standards

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 Ethiopian Institute Users of Accounting
of Financial Studies
information

 Investors in a business enterprise need information about its financial

status and its future prospects.
 Banker and suppliers appraise the financial soundness of a business
organization and assess the risks involved.
 Government agencies are concerned with the financial activities of
business organization for purposes of taxation and regulation.
 Employees and their union representatives a also vitally interested in
the stability and the profitability of the organization that hires them.
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 Ethiopian Institute Users of Accounting
of Financial Studies
information

Managers relies upon accounting

 to provide the amount owed to each creditor and by each customer
and the date each payment is due.
 To assist them in evaluating current operations and in planning future
operations

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 Ethiopian Institute
of Financial Studies IFRS CONCEPT

International Financial Reporting Standards (IFRS)

IFRS:- a common set of standards that indicates how to report economic events
Financial accountants follow international Financial Reporting Standards (IFRS) in
preparing reports allow investors and other users to compare one company to
another
International Accounting standard board (IASB) has the primary responsibility for
developing accounting principles.
the objective of IASB is to develop and improve accounting standards (IFRS)
The Objective of IFRS is to provide financial information about the reporting entry
that is useful to interested users
IFRS are considered to be more “Principle-based” than U.S GAAP Which is
considered
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 Ethiopian Institute
of Financial Studies IFRS CONCEPT

International Financial Reporting Standards (IFRS)

1. Business Entity concept: - the business is viewed as an entity separate from
its owners, creditors, or other businesses
 for example, the accountant for a business with one owner would record the
activities of the business only and would not record the personal activities,
property or debts of the owner.
 Under this principle, the activities of a business are recorded separately from the
activities of its owners, creditors, or other businesses.
2. The Monetary unit concept: - Requires that economic data be recorded in birr,
dollars etc.
 Money is a common unit of measurement for reporting financial data and reports.
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 Ethiopian Institute
of Financial Studies IFRS CONCEPT

International Financial Reporting Standards (IFRS)

3. Measurement Principles:-
 Fair Value Measurement: indicates that assets and liabilities should be
reported at a Market Value
 IFRS and IFRS for SMEs require (or permit) for value measurement for a
number of assets and liabilities.
 Existing Ethiopian Reporting does not permit use of fair value
measurement except in financial institutions.
 this measurement principles provide more relevant or useful and
reliable information for decision making than historical cost principle
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 Ethiopian Institute
of Financial Studies IFRS CONCEPT

International Financial Reporting Standards (IFRS)

4. The Objectivity concept: -
indicates that the amounts recorded in the accounting records be based on objective evidence,
only the final agreed-upon amount is objective enough to be recorded in the accounting
records.
5. Periodicity Principle: -
it states that an organization can report its financial results within certain designated periods
of time.
 This typically means that an entity consistently reports its results and cash flows on a
monthly, quarterly or annual basis.
 the economic life of business can be divided into artificial time periods usually on annual
basis.
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 Ethiopian Institute
of Financial Studies IFRS CONCEPT

International Financial Reporting Standards (IFRS)

6. Going Concept /Continuity Assumption/:-
the life of an economic entity is indeterminate and the economic entity
will continue in operation long enough to carry out its existing objective
and commitments.
7. Revenue and expense recognition principle:-
(Accrual Basis Principle): it states that revenues are recognized when
earned and expenses are recognized when consumed or incurred (accrual
basis of accounting)

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 Ethiopian Institute
of Financial Studies IFRS CONCEPT

International Financial Reporting Standards (IFRS)

8. Matching Principle:-
it states that Expense incurred during a period be recorded in the same
period in which the related revenue are earned.
• This principle recognizes that businesses must incur expenses to earn
revenues

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 Ethiopian Institute
of Financial Studies

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 Ethiopian Institute
of Financial Studies
UNIT
TWO
Accounting Cycle

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 Accounting Cycle
Ethiopian Institute
of Financial Studies

Accounting Cycle
 Accounting cycle refers to the specific tasks involved in completing an
accounting process.
 The length of an accounting cycle can be monthly, quarterly, half-
yearly, or annually.
 It may vary from organization to organization but the process remains
the same.

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 Ethiopian Institute
of Financial Studies Accounting Process

Collecting and Analyzing Source Document

 Each accounting transaction accounted in the books of the Bank shall

be supported by proper documentation that shall either be generated
internally or externally and exist in paper or electronic form

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 Ethiopian Institute
of Financial Studies Accounting Process

Collecting and Analyzing Source Document

 Each type of source document shall be checked and approved

for its appropriateness and/or genuineness before the
corresponding transaction entries are posted.
 Banks have their own authorization limit for each
transaction based on their level authorization

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 Ethiopian Institute
of Financial Studies Accounting Process

Types of Source Document For Bank

 According to the Objective Evidence concept, every financial entry
should be supported by objective evidence.
 The following evidence for Bank to support different transaction
 Saving Withdrawal form, Cash Deposit Form
Cheque
CPO
Telephone bill, Electric bill, etc.
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 Ethiopian Institute
of Financial Studies Accounting Process

Posting in the Journal

 Journal is a book that is maintained on a daily basis for
recording all the financial entries of the day.
 Passing the entries is called journal entry.
 Journal entries are passed according to rules of debit and
credit of double entry system
 CBE Uses T24 Application to process its transaction
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 Ethiopian Institute
of Financial Studies Accounting Process

Rule of Debit and Credit

Category Debit Credit Normal Balance

Asset When it increases When it Decreases It’s Increase Side( Debit)

Liability When it Decreases When it increases It’s Increase Side (Credit)

Capital When it Decreases When it increases It’s Increase Side( Credit)

Income When it Decreases When it increases It’s increase Side( Credit)

Expense When it increase When it Decreases It’s Increase Side(Debit)

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 Ethiopian Institute
of Financial Studies Accounting Process

Types of ledgers
Subsidiary ledger –
 Subdivisions of general ledger accounts and contain detailed
information for the balance in the general ledger accounts.
 With proper and accurate posting the total figures in the subsidiary
ledger accounts of the same classifications should agree with the
balance of respective general ledger accounts.
 Since the general ledger accounts are used to prepare financial
statement ,it is important to make sure that the subsidiary ledger
balance are reconciled to the general ledger before preparing
financial statements.
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 Ethiopian Institute
of Financial Studies Accounting Process

Types of ledgers
General ledger
 which shows the summary of all transactions of each
classification of Assets, Liabilities, Income and Expense accounts
 The aggregate balance of each group of subsidiary ledger
accounts should agree with their respective balance of the
general ledger
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 Ethiopian Institute
of Financial Studies Accounting Process

Normal Balance of Accounts

The following accounts have a normal debit balance
Asset accounts
Expense accounts
Memorandum/Contingent Asset Accounts
The following accounts have a normal credit balance
Liability accounts
Capital and Reserve accounts
Income accounts
Contingent Liability accounts
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 Ethiopian Institute
of Financial Studies Accounting Process

Normal Balance of Accounts

 The accounts are arranged in the ledger in numerical order.
As a result, they can be located quickly.
 The balance sheet accounts are usually listed first, in the
order of Assets, liabilities, and owner's equity.
Assets = Liabilities + Owners' Equity
 The income statement accounts are then listed in the order
of revenues and expenses. Each of these major account
classifications is briefly described .

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 Ethiopian Institute
of Financial Studies

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 Discussion
Ethiopian Institute
of Financial Studies

 Discuss on Source Document and the rules of Debit and Credit for
Asset and liability by mention their normal balance.
 Discuss on the accounting Cycle and the rules of debit and Credit
for Capital, Income and Expense by mentioning their normal
balance

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 Unit Three
Ethiopian Institute
of Financial Studies

Internal Account and Entry Management

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 Internal Account
Ethiopian Institute
of Financial Studies

Internal accounts are the Bank's own accounts for which it

uses to maintain all relevant transaction information.
They are Classified based on the five major Account groups.
 Asset
 Liability
 Capital
 Income
 Expense
 Memorandum Account
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 Internal Account
Ethiopian Institute
of Financial Studies

Asset Accounts
asset is a resource controlled by the enterprise as a result of past
events and from which future economic benefits are expected to flow to
the entity.
 Asset in Bank are Classified under the following Sub
Headings
 Cash Account
 Account Receivable
 Fixed Asset
 Intangible Asset
 Other Proprieties
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 Internal Account
Ethiopian Institute
of Financial Studies

Internal Account on T-24 Systems

Internal Accounts
The format for an internal account number refers
CCYCCCCCSSSSBBBB of alpha numeric 16 digits.
CCY is the SWIFT currency code of the account e.g. ETB, EUR,USD, etc
 CCCCC is a category code in the range 10000 - 19999
SSSS is a sequential number in the range 0001-9999
BBBB is the sub division code of the branch the account belongs to.
Example: - ETB-I000I-000I-000l
(For More information on CHART OF ACCOUNT open link
Accounting Procedure (pp 15-32))
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 Internal Account
Ethiopian Institute
of Financial Studies

Bank Asset Account Sub groups

 Acquired Properties
 Revenue Stamp
 Cheque Book Stocks
 Prepaid for Rent
 Account receivable
 Head Office Receivable

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 Internal Account
Ethiopian Institute
of Financial Studies

Cash Account

Cash in Cash in Imprest Cash in

Teller ATM Fund Vault

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 Internal Account
Ethiopian Institute
of Financial Studies

Cash - Teller
 This category shall be used to open and summarize cash account
by specific teller ID.
 It is used to receive and send cash from the Chief Cashier, and
Customer.

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 Internal Account
Ethiopian Institute
of Financial Studies

Cash in ATM
 This category shall be used to open and summarize ATM cash
accounts maintained by a branch
 Cash is loaded to the ATM Machine for the customer to with draw
by their VISA Card .And it is Replenished When it Finish.

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 Internal Account
Ethiopian Institute
of Financial Studies

Transaction
Customer service manager and Chief
Cashier loaded the branch ATM birr
800,000.

Debit: Cash ATM ……..800,000

Credit : Cash Teller………………….800,000
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 Internal Account
Ethiopian Institute
of Financial Studies

Transaction

Woy. Selam withdraw birr 4,000 from her saving

account by her ATM Card

Debit: Saving Account of selam ……………4004

Credit: Cash ATM…………………………………………………4,000
Credit : ATM Commission……………………………………….....4
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 Internal Account
Ethiopian Institute
of Financial Studies

Imprest Fund
This category shall be used to open and summarize individual accounts
that record petty fund account maintained by a branch or other Bank
organs.
It is used for small items expense by the branch.
It is replenished at the end of every month and when it finish the fund.
As per the purchasing policy of the bank has practice of setting petty
cash balance to branch and head office organ according to their grade
and section. For example in branch cases

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 Internal Account
Ethiopian Institute
of Financial Studies

Transaction
Your branch establish it’s imprest fund
birr 600

Debit: Imprest Fund………………600

Credit: Cash Teller …………………………..600
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 Internal Account
Ethiopian Institute
of Financial Studies

Transaction
Replenish the Petty Cash for the month end date with the
following expense Birr 50 postage, Birr 30 Wage, Birr 110
Transport

Debit: Postage Expense………………50

Debit: Wage……………………………... 30
Debit :Transport ………………………110
Credit: Cash Teller………………………………………………..190

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 Internal Account
Ethiopian Institute
of Financial Studies

Cash in Vault
 This category shall be used to open Vault Cash account of branches or
other Bank organs.
 It is used to receive cash from The Chief Cashier and send to the
SCSO –Cash Till.

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06/21/2024 ETHIOPIAN INSTITUTE OF FINANCIAL STUDIES 52
 Internal Account
Ethiopian Institute
of Financial Studies

Activity-Journal Entry

To be done Individually and discuss in the class

1. Customer service manager and Chief Cashier loaded the branch
ATM birr 600,000.
2. Ato Abebe withdraw birr 4,000 from his saving account by his
ATM Card
3. Your branch establish it’s imprest fund birr 300
4. Replenish the Petty Cash for the month end date with the
following expense Birr 75 postage, Birr 25 Wage, Birr 35
Transport
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 Internal Account
Ethiopian Institute
of Financial Studies

Fixed Asset

 What is Fixed Asset?

 What are the classifications of FA?
 Why FA managed?
 What are standard fixed asset control
procedures?

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 fixed asset.ppt 54
 Internal Account
Ethiopian Institute
of Financial Studies

Fixed Asset
Bank’s Fixed Asset are classified under the following
sub heading
 Premises
 Motor Vehicle
 Furniture and Fittings
 Office and Other Equipment
 Computer and Accessories
 ATM and POS
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 Internal Account
Ethiopian Institute
of Financial Studies

Fixed Asset
 Currently in our bank all the accounting of the fixed asset
are healed at head office finance.
 But the role of the branch and other bank organ is to use
the fixed asset properly and control it.
 In addition to this branch and other bank organ should
maintain fixed register and reconcile the physical Asset
and register twice a year with head office finance.

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 Internal Account
Ethiopian Institute
of Financial Studies

Fixed Asset
The bank use historical cost to record its fixed asset
Our bank uses straight line basis to calculate the depreciation
expense of its tangible asset
It is done at head office finance.
Tangible Asset % per annum

Buildings 5
Computers and Software 25
Fixtures , Fittings and Equipment 20
Motor Vechicles 20
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 Internal Account
Ethiopian Institute
of Financial Studies

Fixed Asset
Every Employee in Bank should have taking over all the fixed asset that they are
.
using for their daily operation
Commercial Bank of Ethiopia
Handing over Format for Fixed Asset Items to Employees
Branch/ Unit:__--------------------------------_____________________
Number Tag Number Category Receiving Description Cost Condition of FA Remark
Date Broken/Normal/
Functional/not
functional

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 Internal Account
Ethiopian Institute
of Financial Studies

Intangible Asset
Core Banking Software
Card Banking Software
Infrastructure and IT Security Software
Smart Banking Software

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 Internal Account
Ethiopian Institute
of Financial Studies

Other Properties
Construction in progress
Maintenance in progress
Work in progress in furniture workshop
Project in progress

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 Internal Account
Ethiopian Institute
of Financial Studies

Revenue Stamp
This category shall be used to open and summarize individual
accounts that record value of revenue stamp kept for use or sale by
Bank organs.

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 Internal Account
Ethiopian Institute
of Financial Studies

Transaction

Your branch purchased birr 100

revenue stamp in cash

Debit: Revenue Stamp on Hand……100

Credit : Teller Cash…………………….100
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 Internal Account
Ethiopian Institute
of Financial Studies

Transaction

The Branch attached two Revenue

stamp on Loan Contract

Debit: Account or Cash………. 10

Credit: Revenue stamp on Hand………10
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 Internal Account
Ethiopian Institute
of Financial Studies

Prepaid for Rent

 This category shall be used to open and summarize individual
accounts that record payments made in advance to governmental
organizations or individuals for the rental of a flat or a building.
 Such prepayments shall be expensed when the rental period
matures.

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 Internal Account
Ethiopian Institute
of Financial Studies

Transaction/Activity?
Your branch rent from Ato Nega
Tadesse birr 1,800,000 with out
VAT due to the renewal of branch
rent for the coming 5 years and
VAT 15% by dedicating with
holding tax 2%.
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 Internal Account
Ethiopian Institute
of Financial Studies

Transaction
Your branch rent from Ato Nega Tadesse birr 1,800,000 without
VAT due to the renewal of branch rent for the coming 5 years
and VAT 15% by dedicating with holding tax 2%.

Debit : Prepaid Rent…….2,070,000

Credit: Current Account of Nega……….…1,764,000
Credit: VAT Payable…................................270,000
Credit : Withholding Tax …………………………36,000

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 Internal Account
Ethiopian Institute
of Financial Studies

Transaction/Activity?

At the end of the month your

branch accountant amortize
Monthly rent expense the
entry is as follows
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 Internal Account
Ethiopian Institute
of Financial Studies

Transaction
At the end of the month your branch
accountant amortize Monthly rent
expense the entry is as follows

Debit : Rent Expense …….34500

Credit: Prepaid Rent…………………34,500

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 Internal Account
Ethiopian Institute
of Financial Studies

Receivable Account
 There are different kind of receivable in Bank . The following are
most commonly used in branch :
 Adjustment and Refund Receivable
 Employee Salary Advance
 Leave Pay Advance
 Miscellaneous Account Receivable

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 Internal Account
Ethiopian Institute
of Financial Studies

Adjustments and Refund

• This category shall be used to open and summarize
individual accounts that record cash shortages encountered
by tellers and other similar differences ascertained by the
Branch Manager/or Manager - Customer Service/ or Senior
Customer Service Officer.

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 Internal Account
Ethiopian Institute
of Financial Studies

Transaction
Woy. Genet Your branch CSO Maker had shortage
of birr 5000 and her balance on the indemnity
Account Birr 4500.

Debit:Genet CIA ……………………..4,500

Debit: Adjustment & Refund…....500
Credit: Cash-Teller………………………….5000
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 Internal Account
Ethiopian Institute
of Financial Studies

Employees' Salary Advance

This category shall be used to open and summarize individual accounts
that record a portion of the monthly salary advanced to the Bank
employees on public holidays.

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 Internal Account
Ethiopian Institute
of Financial Studies

Transaction
The following staff have paid their net half month salary
Genet Alemu ….3500
Solomon Yeminu …….2100
Ali Mohammed ………………..2000

Debit: Employee’s Salary Advance ..7,600

Credit: Various Employee’s S/A ………………………7,600

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 Internal Account
Ethiopian Institute
of Financial Studies

Leave Pay Advance

• This category shall be used to open and summarize
individual accounts that record staff salaries paid in
advance who are going to commence their annual leaves.

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 Internal Account
Ethiopian Institute
of Financial Studies

Transaction
Woy. Hellen Samuel your branch staff wants her
annual leave for 45 working days and approved by
the branch manager. Her one month net salary is
birr 7500

Debit: Leave Pay Advance ……..15,000

Credit: Hellen S/A or Cash ……………..15,000

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 Internal Account
Ethiopian Institute
of Financial Studies

Account Receivable
 Foreign Receivable
 Claims on Western Union Company
 Claims Dahabshil
 Claim on MoneyGram
 Claim on Bole Atlantic
 Claim on Express Money
 SWIFT Transfer Received

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 Internal Account
Ethiopian Institute
of Financial Studies

Claims on Western Union Company

 This category shall be used to open and summarize
individual accounts that record the values of all WU money
transfers paid on the counters of the Bank's units to WU
customers.

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 Internal Account
Ethiopian Institute
of Financial Studies

Transaction
Ato Solomon WU customer paid 500
USD @ the current buying rate of birr
22.0451

Claim on WU….11022.55
Teller Cash………………….11022.55

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 Internal Account
Ethiopian Institute
of Financial Studies

Claims on Dehabshil
This category shall be used to open and summarize individual
accounts that record the values of Dehabshil money transfers paid
on the counters of the Bank to Dehabshil customers.

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 Internal Account
Ethiopian Institute
of Financial Studies

Transaction

Ato Sabir Customer of Dehabshil pid USD 200

@ the current buying rate of 22.4415

Debit:Claim on Dehabsil……4488.30
Credit:Teller Cash…………………….4488.30

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 Internal Account
Ethiopian Institute
of Financial Studies

Claims on MoneyGram
• This category shall be used to open and summarize
individual accounts that record the values of Money Gram
money transfers paid on the counters of the Bank to
Money Gram customers.

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 Internal Account
Ethiopian Institute
of Financial Studies

Transaction
W/O Chaltu customer of MoneyGram paid
600 USD @ the current buying rate of
22.1540

Claim onMoneyGram………13292.40
Teller Cash………………………13292.40

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 Internal Account
Ethiopian Institute
of Financial Studies

SWIFT Transfers Received

• This category shall be used to open and summarize individual
accounts that record the value of foreign transfer amounts paid to
customers on behalf of correspondent banks who have sent their
payment orders via the SWIFT system.

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 Internal Account
Ethiopian Institute
of Financial Studies

Transaction
Ato Hailu Your Branch SWIFT Customer is
credited his Saving Account USD 1000 @ the
current buying rate of 22.3251

Debit :SWIFT Transfer Received

22325.10
Credit S/A of Ato Hailu……22325.10
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 Internal Account
Ethiopian Institute
of Financial Studies

Cash in Transit -Foreign Currency

• This category shall be used to open and summarize individual
accounts that record the value of foreign currencies
surrendered to cash custody and issue .

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 Internal Account
Ethiopian Institute
of Financial Studies

Transaction
Your Branch Transferred USD 10000 to Cash
Custody and Issue. Its purchase rate was 22.4512
and it’s selling rate when you transferred to cash
custody and issue is 22.5123

Cash In transit FCY….…225,123

FCY USD……………………………..224,512
Gain on foreign exchange ………611
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 Internal Account
Ethiopian Institute
of Financial Studies

Cash in Transit-Local Currency

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 Internal Account
Ethiopian Institute
of Financial Studies

Transaction
Your Branch received birr 4 Million to
Cash custody and issue.

Debit : Teller Cash……4,000,000

Credit: Cash in transit ……….4,000,0000

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 Internal Account
Ethiopian Institute
of Financial Studies

Transaction
Your Branch paid Birr 5 Million for the new branch rent to be
open soon around your branch location.

Claims on Head Office, Branches & Districts ..5,750,000

VAT Payable ………..750,000
With Holding Tax Payable …100,000
Cash/ Customer Account …… 4,900,000

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 Internal Account
Ethiopian Institute
of Financial Studies

Advance Payment Receivable

• This category shall be used to open and summarize any
advances granted in the day-to-day activity of the Bank
organs.

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Advance Payment Receivable

Your Branch paid birr 700 in advance to
the Branch Accountant to purchase
Stationery Materials

Debit: Advance Payment…..700

Credit :Teller Cash……………700

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Activity Four Journal Entry

1. Your branch purchased birr 200 revenue stamp in cash
2. The Branch attached three Revenue stamp Total amount Birr 15 on Loan
Contract
3. Woy. Saba Hagos Your branch CSO Maker had shortage of birr 6000 and her
balance on the indemnity Account Birr 5000.
4. Woy. Hana Samuel your branch staff wants her annual leave 45 working days
and approved by the branch manager and her one month net salary is birr
7000
5. Ato Abebaw Dejen your branch WU customer paid 700 USD @ the current
buying rate of birr 52.2150 and selling rate is Birr 53.0152

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Session two

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Liabilities
 A present obligation of the entity to transfer an
economic resource as a result of past event.
It is a claim of outsiders on total assets of the company
In Bank liabilities are classified under the following sub
headings
 Account Payable
 Tax Payable
 Other Account Payable

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Account Payable

Account Payable Blocked Amount

Account Payable Current Account
Account Payable Blocked Saving

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Blocked Amounts Payable

This category shall be used to open and summarize
individual accounts that record a specified amount of
money earmarked for account of Government Offices,
Individuals, Companies, Embassies, etc. brought to the
Bank to be kept blocked, until officially released, by the
order of individuals and courts and other appropriate
authorities.

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Transaction
. The court ordered your Branch to block birr 500,000 from one of your branch Saving Account
Customer

Debit: Customer Saving Account ….500,000

Credit: Blocked Amount Payable ………..500,000

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Blocked Current Account Payable

• This category shall be used to open and summarize
individual accounts that record the full balance of
customer's current account blocked by court order or by
the request of different organizations, which have the
authority to do so, or by the account holder him/herself.

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Transaction
The Ethiopian Customs and Revenue Authority ordered you to block the full
amount of your branch current account customer. Your customer balance is
birr 1,000,000 when your receive the order.

Debit: Customer Current Account……..1,000,000

Credit : Blocked Current Account Payable……..1,000,000

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Transaction
The Court Ordered your branch to block ato Alemu Saving Account due to his
legal dispute with his wife. His Balance is birr 500,000

Debit: Alemu Saving Account…..500,000

Credit: Blocked Saving Account Payable……..500,000

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Tax Payable
• Bank is one of the largest Tax Payer in our country. There fore it
is necessary to properly record any tax related activates and
declare to Ethiopian Revenue and Customs authority. The
following are the major taxes that Bank Collect and pay to
ERCA.
 Employee Income Tax Payable
 Withholding Tax Payable
 Value Added Tax Payable
 5% interest Tax Payable on Saving Deposit
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Other Account Payable

 Customer’s Deposit
 Adjustment and Refund
 Banks Pension Contribution Payable
 Graduate Cost Sharing Payable
 POS Cash Advance
 CPO Issued
 LMTS Payable
 Miscellaneous Account Payable
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Adjustments and Refund

• This category shall be used to open and summarize individual
accounts that record the value of lost cash found in the bank or the
excess cash found by bank tellers in Bank's business day.
• Where excess is found and no one claim it should be credit to the
bank other income cash surplus.

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Transaction
MR. Abebe Gebre is your branch teller has found an excess of
birr 2500.00 in daily closing of business

Debit: Teller Cash 2,500.00

Credit: A/ P Adj & Refund……..2,500.00

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Banks’ Pension Contribution Payable

• This category shall be used to open and summarize individual
accounts to record Bank's contribution to the pensions plans
of its permanent employees to be transferred to the
appropriate social security organs of the Government
computed at a set rate by the organ of the government on
the basic staff salaries at the payday.
• It is 11% of basic salary

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Employees' Pension Contribution Payable

• This category shall be used to open and summarize individual
accounts to record the periodic pension contributions collected from
the salaries of Bank's employees on behalf of an appropriate
governmental organ at Head Office as well as those pension
contributions collected at branches and transferred to Head Office
Accounts.
• It is 7% of basic salary

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Graduate Cost Sharing Payable

• This category shall be used to open and summarize individual
accounts to record percentage deductions collected on the
monthly basic salaries of Bank's employees who have an
agreement with the appropriate governmental organ, since
1996 Ethiopian Calendar, for sharing the costs of staying in
governmental universities.
• It is 10 % of basic salary

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CPOs Issued
• This category shall be used to open customer type account that
record CPO issued for keeping them under payable until such time
that they are ultimately settled.

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Transaction

W/o Merima Mohamed request to issue CPO in the name of national lottery for birr 15,000.00

Debit: Teller Cash 15,050.00

Credit: A/ P CPO issued……..15,000.00
Commission on cpo. Issued………… 50.00

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Transaction
National lottery request to credit their account cpo issued in their name

Debit: A/ P CPO issued……..15,000.00

Credit National lottery account ……15,000.00

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LMTS Payable
• This category shall be used to open customer accounts (for internal
purpose only) that record LMTS for keeping them under payable until
such time that they are ultimately settled.

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Transaction
Ato Mengistu Alemu Send 1000 Money to online branch
for Sara Solomon

Debit: teller Cash ….1,023

Credit: LMTS Payable……………..1000
Credit: Commission on LMTS………..3
Credit : Service Charge on LMTS….20
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Transaction
Sara Solomon collect money send from Ato Mengistu Alemu

Debit: A/ P LMTS payable……..1,000.00

Credit Teller Cash ……1,000.00
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Capital

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Capital
• Capital. Capital generally refers to the amount or resources invested
by the owner in the business.
• In accounting language it is taken to mean excess of assets over
liabilities.
• Capital = Assets – Liabilities.

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Capital
• The following are the components of capital account for
Bank
• Paid up capital
• Legal Reserve
• Retained Earnings
• Profit and Loss Summary

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Paid up Capital
 This category shall be used to open and summarize individual account
when initial capital is paid on establishment of the Bank and
subsequent increments are made by the owner through additional
capital contributions.

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Legal Reserve
• This category shall be used to open and summarize legal
reserve contribution made on a yearly basis from the annual
business profit of the Bank according to the prevailing
directive of the NBE. This account is credited when the legal
reserve contributions are made on a yearly basis.

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Retained Earning
• This category shall be used to open and summarize individual
accounts that record Profit and Loss/ Retained Earnings that the Bank
retains from its annual net profit. This account is credited when the
decision to retain part of the annual profit is made.

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Profit and Loss Summary Account

• This category shall be used to open and summarize individual
accounts that record Profit and Loss that the Bank retains from its
annual net profit.
• The account shall be zero after the balance is transferred to head
office and respective proration is made at Head office

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Profit and Loss Summary Account

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Activity Five Journal Entry

• The court ordered your Branch to block birr 700,000 from one of your
branch Saving Account Customer
• The Ethiopian Customs and Revenue Authority ordered you to block
the full amount of your branch current account customer. Your
customer balance is birr 2,000,000 when your receive the order.
• W/o Zubeyda Mohamed request to issue CPO in the name of national
lottery for birr 25,000.00

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• In Bank Profit and Loss Accounts are classified under two

major categories
• Product related heads and
• Non Product Related or Overheads.

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Profit and Loss Account

 Product related income or expense result out of banking
products. For example, Interest on Loans, Commission on
LC, and Charges on Different Account etc.
 Non product related heads are Overheads like, Salaries,
Employee benefits, General Expenses ... Etc
 All the product related Income and Expense are the major
Income and Expense groups of our bank.

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Product Related Income

• The Following are the Major Product Related income at branch Level.
 Interest Income
 Cheque Stop Payment Charges
 Cheque Issue Charges
 Statement Charges
 Commissions on CPO
 Outward Remittances
 Service Charge Collections on Salary Payments
 Commission Incomes on Visa Payment
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Interest Income

• This category shall be used to open and summanze all interest income
earned from different products. The system shall automatically raise
accounting entries for interest income based on the given product.
Journal Entry
Debit: Customer Account ………..XXX
Credit: Interest Income…………………….XXX

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Cheque Stop Payment Charges

• This category shall be used to open and summarize commissions

charged from cheque stop payments.
Journal Entry
Debit: Customer Account ………..XXX
Credit: Commission from stop payments…………………….XXX

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Cheque Issue Charges

• This category shall be used to open and summarize commissions

charged from Cheque Issue.
Journal Entry
Debit: Customer Account/Cash/ ………..XXX
Credit: Commission from cheque issue …………………….XXX

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Statement Charges
• This category shall be used to open and summarize commissions
earned from statement charges.
Journal Entry
Debit: Customer Account/ Cash/ ………..XXX
Credit: Commission from Statement charges …………………….XXX

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Commissions on CPO

• This category shall be used to open and summarize commissions

charged from certified cheque issued.
Journal Entry
Debit: Customer Account/ Cash ………..XXX
Credit: Commission from CPO issued …………………….XXX

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Outward Remittances

• This category shall be used to open and summarize commissions

charged from outward remittances.
Journal Entry
Debit: Customer Account/ Cash ………..XXX
Credit: Commission from Outward Remittances …………………….XXX

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Service Charge Collections on Salary Payments

• This category shall be used to open and summarize commissions

earned from service charge collections on salary payments.
Journal Entry
Debit: Customer Account……………..XXX
Credit: Service charge …………………….XXX

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Commission Incomes on VISA Payment

• This category shall be used to open and summarize commissions

earned from Visa payment charges.
Journal Entry
Debit: Customer Account……………..XXX
Credit: Commission incomes on VISA Payment …………………….XXX

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Non Product Related PL

• Major Types of Bank Non Products Related Expense are

classified under the following sub Headings.
 Employee Salaries
 Employee Benefit
 Allowances
 Other Employee Benefit
 General Expense

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Employee Salaries
 Salaries Expense-Clerical
 Salaries Expense-Non Clerical

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Salaries Expense-Clerical
• This category shall be used to post monthly gross salaries paid to
permanent clerical employees of the Bank.
Journal Entry
Debit Salary Expense Clerical …………XXX
Credit: Various Accounts (such as Employees Pension Contributions
Payable, Income Tax Payable, Inter Branch Accounts or Staff's account
etc.) …………………………………………………..XXXX

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Salaries Expense-Non Clerical

• This category shall be used to post monthly gross salaries paid to
permanent non clerical employees of the Bank.
Journal Entry
Debit Salary Expense non Clerical …………XXX
Credit: Various Accounts (such as Employees Pension Contributions
Payable, Income Tax Payable, Inter Branch Accounts or
Staff's account etc.)
…………………………………………………..XXXX
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Employee Benefit
 Medical Expense
 Bank’s Pension Contribution
 Uniform Expense

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Medical Expense
This category shall be used to post costs incurred for medicines,
medical treatments and hospital bills for Bank's permanent (but not
retired) employees with approval from appropriate official of the
Bankers' Clinic or the branch or other unit of the Bank.
Journal Entry
Debit: Medical Expense………..XXXX
Credit: Customer A/C or Cash or CPO…………XXX

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Bank’s Pension Contribution

• This category shall be used post the Bank's contribution to the
pensions plans of its permanent employees paid to the appropriate
social security organs of the Government and is computed on the
basic staff salaries.
Journal Entry
Debit: Bank’s Pension Contribution…….XXX
Credit: Pension Payable……………………………………..XXXX

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Uniform Expense
• This category shall be used to post costs of such uniforms as suits,
dresses, ties, shirts, overcoats, shoes, boots, umbrellas, etc. supplied
to clerical and non-clerical staffs of the Bank who are entitled to
receive same.
Journal Entry
Debit: Uniform Expense………..XXXX
Credit: Customer A/C or Cash or CPO…………XXX

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Allowance
• The following are the major allowance at Bank
 Acting Allowance
 Cash Indemnity Allowance
 Disturbance Allowance
 Fuel Allowance
 Housing Allowance
 Living / Hardship/Allowance
 Representation Allowance
 Utility Allowance
 Verification Allowance
 Shifting Allowance
 Cash office Girl/Boy Allowance
 Project Allowance
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Acting Allowance
• This category shall be used to post the amount of allowance paid to
Bank's staffs who are temporarily assigned to act on such positions as
supervisor, head, or manager in the absence of the later from duty
due to different reasons such as annual leave, sick leave, etc.
according to the relevant HR procedure.
Journal Entry
Debit: Acting Allowance ………..XXXX
Credit: Staff A/C ……………………..…………XXX

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Cash Indemnity Allowance

• This category shall be used to post the amount of periodic allowances
allotted and paid to cover the possible cash shortages of the Bank's
front office makers at branches and Senior Customer Service Officers-
Cash.
Journal Entry
Debit: Cash indemnity Allowance ………..XXXX
Credit: Staff A/C ……………………..…………XXX

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Disturbance Allowance
• This category shall be used to post the specific amounts paid to staffs
transferred to and from Head Office and/or from one branch to
another located in two separate cities or towns with an appropriate
approval.
Journal Entry
Debit: Disturbance Allowance ………..XXXX
Credit: Staff A/C ……………………..…………XXX

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Disturbance Allowance
• This category shall be used to post the specific amounts paid to staffs
transferred to and from Head Office and/or from one branch to
another located in two separate cities or towns with an appropriate
approval.
Journal Entry
Debit: Disturbance Allowance ………..XXXX
Credit: Staff A/C ……………………..…………XXX

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Fuel Allowance
• This category shall be used to post the costs incurred by the Bank for
periodic fuel allowances to various staffs.
Journal Entry
Debit: Fuel Allowance ………..XXXX
Credit: Staff A/C ……………………..…………XXX

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Housing Allowance
• This category shall be used to post the sum paid by way of an
allowance, as per the prevailing and appropriate agreements between
the Bank and employees' labor union; to cover rent expenses of staffs
leaving their center of employment.
Journal Entry
Debit: Housing Allowance ………..XXXX
Credit: Staff A/C ……………………..…………XXX

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Living / Hardship/Allowance
• This category shall be used to post the amounts paid by way of an
allowance to the staffs of the Bank working in places where high cost
of living or hardship is exhibited resulting from inconvenient climatic
conditions.
• The amount of such allowances is computed by applying a certain
percentage on employees' gross salaries.
Journal Entry
Debit: Living /Hardship Allowance ………..XXXX
Credit: Staff A/C ……………………..…………XXX
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Representation Allowance
• This category shall be used to post the costs incurred by the Bank
through periodic representation allowances for managerial and
professional post incumbents.
Journal Entry
Debit: Representation Allowance ………..XXXX
Credit: Staff A/C ……………………..…………XXX

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Utility Allowance
• This category shall be used to post the fixed monthly water, electricity and
other utilities allowances paid to employees of the Bank living in the free
furnished living quarters of the Bank provided that these living quarters
have their own water and light meters. If water and light meters of the
staff residence and the office are one and the same, the Bank will settle
the bills of such utilities and no Utility Allowance will be paid to the staffs.
Journal Entry
Debit: Utility Allowance ………..XXXX
Credit: Staff A/C ……………………..…………XXX

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Verification Allowance
• This category shall be used to post the fixed sum paid, per associated
approvals, to the Bank's employees that are assigned in branches with
the mandate and responsibility to identify and verify authorized
signatures together with the normal activities.
Journal Entry
Debit: Verification Allowance ………..XXXX
Credit: Staff A/C ……………………..…………XXX

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Shifting Allowance
• This category shall be used to post the Allowances paid by the Bank to
its employees who are working on Saturdays' afternoon.
Journal Entry
Debit: Shifting Allowance ………..XXXX
Credit: Staff A/C ……………………..…………XXX

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Cash Office Girl/Boy Attendant Allowance

• This category shall be used to post the allowances paid by the Bank to
Cash Office Girls/Boys.
Journal Entry
Debit: Cash office girl/boy Allowance ………..XXXX
Credit: Staff A/C ……………………..………………………………XXX

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Project Allowance
• This category shall be used to post the allowances paid by the Bank to
its employees who are working on various projects as duly approved by
the appropriate officials.
Journal Entry
Debit: Project Allowance ………………………....XXXX
Credit: Staff A/C ……………………..………………………………XXX

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Other Employee Benefit

 Overtime Pay –Clerical
 Overtime Pay- Non Clerical
 Bonus –Clerical
 Bonus-Non Clerical
 Funeral Expense
 Drivers Bonus
 Maternity Pay
 Retirement Award
 Service Pin Award
 Severance Pay
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Overtime Pay –Clerical

• This category shall be used to post the amount of payments made to
clerical employees of the Bank for the work they have performed after
the normal working hours and/or during weekends and holidays.
Journal Entry
Debit: Overtime Pay-Clerical ………………………....XXXX
Credit: Staff A/C ……………………..………………………………XXX

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Overtime Pay- Non Clerical

• This category shall be used to post the amount of payments made to
non-clerical employees of the Bank for the work they have performed
after the normal working hours and/or during weekends and holidays.
Journal Entry
Debit: Overtime Pay-Non Clerical ………………………....XXXX
Credit: Staff A/C ……………………..………………………………XXX

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Bonus –Clerical
This category shall be used to post the amounts paid to clerical staff of
the Bank in addition to the normal pay as a reward on Bank's annual
profitability and specific employee's good performances.
Journal Entry
Debit: Bonus- Clerical ………………………....XXXX
Credit: Staff A/C ……………………..………………………………XXX

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Bonus-Non Clerical
• This category shall be used to post the amounts paid to non-clerical
staff of the Bank in addition to the normal pay as a reward on Bank's
annual profitability and specific employee's good performances.
Journal Entry
Debit: Bonus- Non Clerical ………………………....XXXX
Credit: Staff A/C ……………………..………………………………XXX

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Drivers Bonus
• This category shall be used to post the fixed amount approved and
paid as an incentive to entitled drivers who have not caused any car
accidents during a period.
Journal Entry
Debit: Drivers Bonus ………………………....XXXX
Credit: Staff A/C ……………………..………………………………XXX

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Funeral Expense
• This category shall be used to post a lump sum amount paid to
families of deceased employee of the Bank
Journal Entry
Debit: Funeral Expense………………………....XXXX
Credit: Staff A/C /Cash/ ……………………..………………………………XXX

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Maternity Pay
• This category shall be used to post the fixed amount paid to female
employees of the Bank who gave birth to a child.
Journal Entry
Debit: Maternity Pay………………………....XXXX
Credit: Staff A/C /Cash/ ……………………..…………XXX

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Retirement Award
• This category shall be used to post a fixed cash payment made to
employees who leave the Bank due to retirement.
Journal Entry
Debit: Retirement Award………………………....XXXX
Credit: Staff A/C ……………………..………………………………XXX

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Service Pin Award

• This category shall be used to post the costs of pins made of gold or
other materials awarded to those employees who served the Bank
for specific period of time or external parties as approved by the
appropriate levels of management.
Journal Entry
Debit: Service Pin Award………………………....XXXX
Credit: Staff A/C ………………………………………XXX

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General Expense
 Branch Inauguration Expense
 Cleaning Supplies Expense
 Currency Transportation Expense
 Electronic Data Transfer Expense
 Generator Running Expense
 Educational and Development Expense
 Training Expense
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General Expense
 Maintenance Expense & Repair Expense Premises
 Maintenance & Repair Computer & Accessories
 Maintenance & Repair Furniture and Fittings
 Maintenance & Repair Motor Vehicle
 Maintenance & Repair office and other Equipment
 Office Rent Expense
 Periderm and Travel Expense
 Petrol and Lubricant Expense
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General Expense
 Postage Expense
 Stationary and Printing Expense
 Telephones & Telex Expense
 Transportation Expense
 Wage Expense
 Utility Expense
 Miscellaneous Expense

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Branch Inauguration Expense

• This category shall be used to post all such costs as cost of printing
invitation cards, booklets and pamphlets commemorating the occasion
cost of meals and beverages incurred while introducing the opening of
a new branch and other similar costs.
Journal Entry
Debit: Branch Inauguration Expense ……..XXXX
Creit: Customer Account/ Cash/ CPO………………………XXX

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Cleaning Supplies Expense

• This category shall be used to post the cost of such cleaning supplies
as brooms, soaps, alcohol, washing rugs, paper towels, wax
detergents; etc. bought for Bank's offices use.
Journal Entry
Debit: Cleaning Supplies Expense ………………………....XXXX
Credit: Cash ……………………..………………………………XXX

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Currency Transportation Expense

• This category shall be used to post such costs as fuel, wages for
loading and unloading daily laborers, airfreight and Perdiem paid to
drivers and guards incurred in connection with the transportation of
currencies from a center or a branch to another.
Journal Entry
Debit: Currency Transportation Expense ………………………....XXXX
Credit: Cash ……………………..………………………………XXX

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Electronic Data Transfer Expense

• This category shall be used to post costs related to the periodic
electronic data communication services for broad band internet
connection, ROUTER, SWIFT etc…
Journal Entry
Debit: Electronic Data Transfer Expense ………………………....XXXX
Credit: Cash ……………………..………………………………XXX

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Generator Running Expense

• This category shall be used to post periodic cost of running the Bank's
or branch's own generators and the share of generator running
expense incurred on rented buildings for Bank's units that do not have
their own generator.
Journal Entry
Debit: Generator Running Expense ………………………....XXXX
Credit: Cash ……………………..………………………………XXX

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Educational and Development Expense

• This category shall be used to post tuition fees refunded to and paid
for employees who attend extension and distance classes at various
schools, colleges and universities as per approval from the Corporate
HRM and the amount of Bank's share of expenses related to the
Ethiopian Institute for Banking and Insurance studies
Journal Entry
Educational and Development Expense ……………....XXXX
Customer A/C / Cash / CPO ………………………………XXX

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Training Expense
• This category shall be used to post such expenses as transportation,
perdiem, subsistence allowances and others related expenses
incurred in connection with trainings and seminars organized by the
Bank to train its employees locally or abroad.
Journal Entry
Debit: Training Expense ………………………....XXXX
Credit: Customer A/C / Cash /CPO………………………………XXX

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Maintenance Expense & Repair Expense Premises

• This category shall be used to post the costs of materials and identified
labor and other costs applied in the maintenance and repair of Bank's
own premises that do not increase the useful life of the premises.
Journal Entry
Maintenance & Repair Premises Expense …………....XXXX
Customer A/C / Cash /CPO………………………………XXX

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Maintenance & Repair Computer & Accessories

• This category shall be used to post the costs of parts and any identified
labor costs in the maintenance, repair and servicing of Bank's computer
systems and associated accessories that do not increase the their
useful life.
Journal Entry
Maintenance & Repair Computer & Accessories. ……....XXXX
Customer A/C / Cash /CPO………………………………XXX

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Maintenance & Repair Furniture and Fittings

• This category shall be used to post the costs of parts and identified
labor costs in the maintenance, repair and servicing of Bank's furniture
and fittings that do not increase the useful life of the fixed assets
Journal Entry
Debit: Maintenance & Repair Furniture & Fittings ……....XXXX
Credit: Customer A/C / Cash /CPO………………………………XXX

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Maintenance & Repair Motor Vehicle

• This category shall be used to post the costs of spare parts and
identified labor costs in the maintenance, repair and servicing of Bank's
motor vehicles, motorcycles, trailers and bicycles that do not increase
the useful life of such fixed assets.
Journal Entry
Debit: Maintenance & Repair Motor Vehicle ……....XXXX
Credit: Customer A/C / Cash /CPO………………………………XXX

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Maintenance & Repair office and other Equipment

• This category shall be used to post the costs of parts and identified
labor costs in the maintenance repair and servicing of Bank's own
office and other equipment that do not increase the useful life of such
fixed assets.
Journal Entry
Debit: Maintenance & Repair office & Other Equipment ……....XXXX
Credit: Customer A/C / Cash /CPO………………………………XXX

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Office Rent Expense

• This category shall be used to post the amount of rental expenses
incurred during Bank's accounting period for buildings or premises
being rented and used by the Bank.
Journal Entry
Debit: Office Rent Expense ……....XXXX
Credit: Prepaid office Rent ………………………………XXX

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Periderm and Travel Expense

• This category shall be used to post the amount of traveling or per-diem
allowances paid to Bank staff on duty travels and hotel
accommodations.
Journal Entry
Debit: Periderms and Travel Expense ……....XXXX
Credit: Staff A/C or Cash ………………………………XXX

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Petrol and Lubricant Expense

• This category shall be used to post the costs of petrol, lubricants, and
other similar costs including the washing costs incurred associated with
the running and greasing of Bank's vehicles
Journal Entry
Debit: Petrol and Lubricant Expense ……....XXXX
Credit: Customer A/C or Cash / CPO………………………………XXX

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Postage Expense
• This category shall be used to post Bank's annual Post Office box rental
fees and postage expenses incurred to mail different items to its
Branches, Customers and Foreign Correspondent Banks.
Journal Entry
Debit: Postage Expense ……....XXXX
Credit: Cash ………………………………XXX

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Stationary and Printing Expense

• This category shall be used to post the costs of printing of various bank
documents, and costs of such office supplies as staplers, perforators,
rulers, ink, ribbons, cartons, carbon papers, writing pads, pen, pencils,
supplied by the appropriate organ of the Bank or purchased using its
imprest funds.
Journal Entry
Debit: Stationary and Printing Expense ……....XXXX
Credit: Customer A/C Cash ………………………………XXX

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Telephones & Telex Expense

• This category shall be used to post the values of periodic bills of
telephone, telegram and fax charged by the providers of these services
against the Bank as well as the annual radio license fees paid to the
appropriate organ of the government and the periodic rental charges
on residential telephone lines of district and branch managers' in
outlying branches.
Journal Entry
Debit: Telephones & Telex Expense ……....XXXX
Credit: Customer A/C Cash / CPO ………………………………XXX
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Transportation Expense
• This category shall be used to post the costs of air tickets, buses, train,
ship or boat fares incurred in connection with staff duty travel and
expenses incurred by the Bank to transport an employee transferred
from one branch to another.
Journal Entry
Debit: Transportation Expense ……....XXXX
Credit: Staff Account/ Cash ………………………………XXX

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Wage Expense
• This category shall be used to post wage paid to daily laborers and
contract employees, such as office boy / girl, messengers, guards,
cleaners, etc.
Journal Entry
Debit: Wage Expense ……....XXXX
Credit: Customer Account/ Cash ………………………………XXX

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Wage Expense
• This category shall be used to post wage paid to daily laborers and
contract employees, such as office boy / girl, messengers, guards,
cleaners, etc.
Journal Entry
Debit: Wage Expense ……....XXXX
Credit: Customer Account/ Cash ………………………………XXX

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Utility Expense
• This category shall be used to post the values of bills paid for cost of
water and electricity consumed by Bank's office, warehouse and staff
residential quarters that do not have separate utility meter.
Journal Entry
Debit: Utility Expense ………………………………….…....XXXX
Credit: Customer Account/ Cash/ CPO……………XXX

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Miscellaneous Expenses
• This category shall be used to post values of diverse and infrequent
expenses that do not conveniently fall under any of the other expense
sub accounts
Journal Entry
Debit: Miscellaneous Expense ….…....XXXX
Credit: Cash………………………….…XXX

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Closing book of account

• It is known that , all income and expense accounts are temporary
account.
• Due to this all Profit and Loss account ( Income and Expense) account
are closed at the end of the fiscal year.

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Off-Balance Sheet Accounts

• Accrued Interest Income on Non-Performing Loans and Advances
• Accrued Interest Income on Loans and Advances under Foreclosure
• Accrued Interest Income on Loans and Advances under Litigation
• Capitalized Interest on NPL Overdrafts
• Inward Documentary Bills for Collection – Acceptance
• Inward Documentary Bills for Collection – Sight
• Money Bags
• Outward Bills for Collection – Bank’s Branches
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Off-Balance Sheet Accounts

• Accrued Interest Income on Non-Performing Loans and Advances
• Accrued Interest Income on Loans and Advances under Foreclosure
• Accrued Interest Income on Loans and Advances under Litigation
• Capitalized Interest on NPL Overdrafts
• Inward Documentary Bills for Collection – Acceptance
• Inward Documentary Bills for Collection – Sight
• Money Bags
• Outward Bills for Collection – Bank’s Branches
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Off Balance Sheet Account Cont…

• Outward Bills for Collection – Other Banks
• Outward Bills for Collection – Foreign
• Outward Documentary Bills for Collection – Acceptance
• Outward Documentary Bills for Collection – Sight
• Written Off Loans and Advances
• Written Off Other Accounts
• Travelers’ Cheques
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Contingency and Commitment

• Guarantees Issued – Foreign Outgoing
• Outstanding Import Letter of Credit
• Loan Commitment – Overdraft
• Loan Commitment – Term Loan
• Construction and Other Commitments

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Activity Six Journal Entry

1. Birr 3,500 paid to the family of a deceased employee to defray the funeral ceremony
2. Cash collected birr 20 from customer commissions charge for cheque stop payments.
3. Excess cash Birr 1500 was found from the front office maker ato Solomon, dated 01.07.2022. .
4. Paid Birr 600 in cash for maintenance of three chairs and two tables
5. Cash excess found dated 01.07.2022 refunded the full amount to the right claimant dated 03.07.2022
6. Paid 40,000.00 cost of printing invitation cards, meals and beverages incurred while introducing the
opening of a new branch and other similar costs
7. Issued C.P.O to Ethio Telecom for birr 1000 being EVDO usage of the branch for the month
8. During the month end replenishment of petty cash the branch has paid Birr 24 for postage and Birr 30
for unloading of currency respectively
9. Cash paid birr 5500 for costs as fuel, wages for loading and unloading daily laborers, in connection with
the transportation of currencies from a center or a branch to another.
10. Paid Birr 250.00 in cash for soaps and alcohol, bought for Bank's office use.

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Reversal Entry

• If an account is erroneously debited or credited, a reversal

accounting entry shall be prepared to debit or credit the
correct account and to credit or debit the incorrect account
by the full amounts of the transactions

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Adjusting Entries
• Certain accounting events shall give rise for the need to record
transactions m different periods than only in the event period calling
for posting adjusting entries to match revenues with related expenses,
regardless of when the cash changes hands.
• Adjusting entries shall, therefore, be required at the end of the
accounting period in order to bring the accounts up-to-date and ensure
the proper matching of revenues and expenses under the accrual
method of accounting.

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Cheque Clearing System

• It is the process of moving a cheque from the bank in

which it was deposited to the bank from which it was drawn
and the movement of the money in the opposite direction.
• It normally results in a credit to the account at the bank of
deposit, and an equivalent debit to the account at the bank
on which it was drawn.

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Two common cheque clearing approaches

1. Document based approach
• The presenting bank collect the cheque and send the physical
cheque to drawee through the clearing bank/institution
 More advanced type document based approach is sending the image of the
cheque and data through electronic media in addition to exchange the
physical cheques.
(Current approach applied by Ethiopian Banks)

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2. Cheque Truncation

• It is a settlement of clearing transactions on the basis of images and

electronic data without the physical movement of the instruments.
• It is also the process of stopping the physical movement of cheques
from the presenting bank to the issuing bank;

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Cheque Truncation System

• CTS allows Banks to truncate cheques at the “point of capture” by providing the
capabilities of presenting cheques to the “paying bank” electronically and process
return cheque electronically.
• The presenting bank is responsible for ensuring the genuineness of the cheque
and retain the physical cheque for the future reference.

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Cheque Truncation System

• CTS allows Banks to truncate cheques at the “point of capture” by providing the
capabilities of presenting cheques to the “paying bank” electronically and process
return cheque electronically.
• The presenting bank is responsible for ensuring the genuineness of the cheque
and retain the physical cheque for the future reference.

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Cheque Truncation System

• The issuing banks have the right to request the presenting bank and

access the physical cheque retained at the presenting bank.

It is to be implemented in Ethiopia Banking Environment in near

future.

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CHEQUE TRUNCATION SYSTEM PROCESS FLOW

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Outward Bills Purchased (OBP)

• Directly credit to customer account

• Accepted based on trustworthiness of the customer

Outward Bills For Collection (OBC)

• Credit to customer account after cheque cleared

through correspondents accounts.

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Suspense Management
• A suspense accounts are accounts used temporarily to carry future
receipts/Receivable accounts / and disbursements /Payable accounts /or
discrepancies pending their analysis and permanent classification

• Suspense items for receivables (asset) categorize as long outstanding items, if it

remains unsettled more than 30 days.

• Suspense items for payable ( Liability) categorize as long outstanding items, if it

remains unsettled more than one year.
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Suspense Management
• Un-cleared effects-local
Transactions that need to be cleared within the domestic branch network or within the
domestic inter-bank clearing system.
Account receivable
• Items that are owed by customers/staff such as double payments, misappropriated
money, etc. which are expected to be converted into cash within the accounting period
• Accounts payable
Items that are payable to customers or owed by the bank, and expected to be settled
within the accounting period are categorized in this general ledger category

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Reasons for long suspense creation

 Lack of adequate follow up
 Lack of appropriate control system
 Lack of proper categorization
 Lack of clear line of responsibility

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Suspense Management
• As per NBE directive SBB/43/2010, banks should keep provision

annually on the basis of aging of their suspense accounts. Therefore,

failure to settle the suspense account in timely manner will force the

bank to tie its assets on provisions.

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NBE Directive No.SBB/48/2010)

AGE RATE FOR PROVISION

30 days and below 1%

31 days – 90 days 3%

91 days – 180 days 20%

181 days – 365/6 days 50%

Above one year 100%

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Suspense account
• Is an account in which debits or credits are held temporarily until sufficient
information is available for them to be posted to the correct accounts. Or

• Items which for one reason or another cannot be passed and recorded into
the account to the account to which they ought to be posted are in the
meantime kept under suspense accounts, pending clearing or settlement.

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There are three main reasons why suspense account may be created

• On the extraction of list of accounts balances the debits are not equal to
the credits and the difference is put to a suspense account.

• When a bookkeeper performing double entry is not sure where to post

one side of an entry he may debit or credit a suspense account.

• When the various type of accounts like short term receivable accounts
paid and payments various accounts paid other than the originating
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POS Reconciliation
• POS Cash advance must be zero at the end of the day. Every performer

on the POS must sure that he/she correctly post for any POS cash

advance transaction before you leave the branch.

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Local Money Transfer (LMTS)

 LMTS must balance every morning before the branch start operation.

 The General Ledger LMTS Payable must always be equal to its tracer.

 If there is any difference you must try to find the difference if not possible you

should contact the district or Head office IT staff for the matter to get

additional support.
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CPO issued Payable

• CPO issued is one of the major transaction which is done by most of

our branches therefore it needs frequent balancing the General ledger

balance with its Tracer.

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ATM Reconciliation
• ATM is one of the payment to that help the branch operation by
availing withdrawal to customer.
• Therefore it is the primary activates of the branch accountant to
reconcile ATM on daily basis.
• Any difference during the ATM Reconciliation should be identified and
the necessary adjustment entry must be done promptly .

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Objective of this chapter

• To know the need of Reconciliation

• Describe the purpose of reconciling accounts

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What do mean by Reconciliation?

• Settlement or arrangement of differences that may exist in suspense
accounts.
• To elaborate further, in terms of banking, The identification of settled
and unsettled items and tracing any nature of difference that may exist.

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Purpose of Reconciliation
Rectify wrong entries (e.g. inter-posts)
Identify fraudulent acts
Identify items outstanding for over thirty days in the case of
transferred funds.
Identify items outstanding for over a year in the case of
negotiable instruments and re-transferred funds.
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Purpose of Reconciliation
 Identify credit entries kept outstanding for an indefinite period of
time(like a/payable- miscellaneous , blocked C/A or S/A etc)
 Tackle any difference, double payment or wrong entry

 Redress timely any irregularities that may arise or to carry out

immediate follow-up for clearance of outstanding items
 Prepare month end returns without discrepancies.

 To identify abnormal balance of accounts.

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Out standing items

• Certain items on the foregoing accounts remain outstanding for a
considerable of time.
• The nature of the outstanding items should be identified and disclosed
at the time of reconciliation by thorough investigating and follow up
until settlement.

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Reasons for outstanding could be

Some the reasons are as follow:-
• Delay in transit
• Due to inter-post
• Due to fraudulent acts
• Difference
• Credit summaries go astray
• Lost in transit(at post office)

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Accounts that are subject to reconciliation

The accounts, which need reconciliation , are those whose items are for one reason or another
not posted instantly(timely) to the respective account but demand close follow-up for
immediate clearance.

1. Suspense accounts
2.Bank Account and correspondent Banks account(reciprocal accounts)
3. Branch Accounts (Head office Account )

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1.Reconcilation of Suspense accounts

The identification of settled and unsettled items and tracing any nature
of difference that may exist in:-
• A, Sundry Debtors
- Accounts Receivable
-Unclear effects- local/ Foreign
• B. Sundry Creditors
- Accounts Payable

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1.Reconcilation of Suspense accounts

• Account Receivable -Adjustment & Refund

-Advance on Salary

-Leave pay

-Miscellaneous

• Unclecred Effects- Blocking out wards saving/Current

-Cash in transit, TT received, MT received

-Claims on H.O and branches

-CPO paid, DD’s paid, Uncleared cheques paid

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Reconcilation of Suspense accounts

• Uncleard Effect-foreign- MT,TT&DD received

-OBP,ODBP

• A/payable - TT ,MT payable, TT,MT retransferred, TT cover &MT before

-Blocking inward, Blocked C/A,S/A, DD payable, CPO issued

-Accrued interest on S/A, on FXD, income tax

-Adjustment and refund, pension contribution , miscellaneous

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Reconciliation of Suspense accounts

• Uncleard Effect-foreign- MT,TT&DD received

-OBP,ODBP

• A/payable - TT ,MT payable, TT,MT retransferred, TT cover &MT before

-Blocking inward, Blocked C/A,S/A, DD payable, CPO issued

-Accrued interest on S/A, on FXD, income tax

-Adjustment and refund, pension contribution , miscellaneous

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Reconciliation of Suspense accounts

• These are of the same nature that requires immediate clearance or settlement

• Upon response through credit summary, the settled items are reconciled in which
the respective tracers are withdrawn and the settled entries cross dated.

• After reconciliation of the settled item, the total balance of outstanding tracers
should tally with the total balance of outstanding entries.

• Any difference in this connection should be traced by identifying its nature.

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Reconciliation of Suspense accounts

• Automated branches The computer generates detail reports of current

and long outstanding suspense accounts that would help for follow-up
• While reconciling the entries on suspense accounts of sundry debtors,
follow up of outstanding items is very essential. Items outstanding for
over 30 days should be considered as long outstanding and the
remitting/responding branches should be communicated for
immediate action.
• This means branches should not wait for the 30 days official time to
make close follow-up on outstanding suspense items of more than 15
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Sundry Creditors
• As discussed earlier, funds payable to beneficiaries are recorded in the subject account to
be kept for a short period of time In the case of acceptance of transfer of funds or
negotiable instruments are passed on subsidiary accounts .

• Items outstanding for over a year in the case of negotiable instruments and retransferred
funds need special attention

• During reconciliation the total balance of outstanding credit entries should agree with the
total balance of remaining, payment vouchers and the unsettled items on the register book
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Sundry Creditors
• However, if a suspense account cannot be cleared through the normal
clearing procedures, it should be cleared via the write back and write off
procedures of the bank.

• Write off -for receivable accounts

• Write back –for payable accounts

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Conditions required for write-back

• When a local transfer of money is not collected by the beneficiary
concerned and remains unclaimed by the remitter for period of two years
or above.
• When an incoming foreign transfer of money is not collected by the
beneficiary concerned and is not claimed by the remitting foreign
bank/Remitting money transfer agents/ for a period of two years or
more.
• When an outgoing foreign transfer is not collected by the beneficiary
abroad and is not claimed by the remitter for a period of two years or
more.
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Conditions required for write-back

• When a credit balance under “Accounts Payable-Reconciliation”

remains unclaimed for a period of two years or more.
• When any other payable item remains unclaimed for a period of two
years or more despite reasonable effort by the Bank to settle the
payable item.

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Initiation and processing of write-back

• Proposals to write back outstanding payable items can be initiated by Branches, Finance Process, TS
Process, etc.

• The following actions shall be taken by the branches concerned to process the write-back of payable
items.
• Identify payable items to be written-back
• Complete the write back form
• Complete and attach the required evidentiary/ supporting documents or forward valid and
strong justification/s in the absence of evidentiary documents.
• Send the write-back proposal, together with the documents to the approving organ
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Initiation and processing of write-back

• For each write-back proposal, prepare and enclose a statement justifying the
proposal. The statement should at least:
• Explain why the payable item could not be settled
• Give a full account of the efforts made by the initiating organ to settle the item;
and
• Provide the reasons for recommending the write-back.

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The District office /H>Office shall review the write-back proposals made by the
branches under its supervision to ensure the following:
• That no claim was lodged for the payable items;

• That the branch office has exerted every reasonable effort to settle the payable items concerned;

• That the required evidentiary/supporting documents are in order and attached, that Form is
completed and the required evidentiary/supporting documents are in order and attached or
acceptable and reasonable justifications are forwarded in the absence of evidentiary/supporting
documents.

• That the statement justifying the proposal for write-back has been properly prepared and enclosed;
and

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The District office /H>Office shall review the write-back proposals made by the
branches under its supervision to ensure the following:

• That the amount approved for write-back is correct.

• If the approver organ is satisfied that all the above are in order and he/she agrees
with the recommendation, made by the branch/ district/ finance …. office, he/she
shall approve and send a copy of form along with supporting documents within 15
days to the FMD. If he/she disagrees with the branch’s recommendation he/she
shall return the proposal to the branch with explicit instruction.

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Evidentiary Documents may include

Copy of the ticket which indicates the date of transaction
• Correspondences made in an effort to settle the item, if any
• A written statement indicating that every reasonable effort has been exerted to
settle the item
• All write-back initiating organs shall keep their own register books for recording
all approved write-back cases pertinent to them in order to enable them to
further follow-up the cases.

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Conditions for writing off receivables

• If a claim from a correspondent bank proves too difficult to collect.

• When negotiable instruments related to foreign transaction are lost in transit

• When investigation charges regarding claims against correspondent exceed the value of the
claims

• When , in case of frauds, when the fraudster has no property or when his the value of his
property is less than the cost of recovery

• When the whereabouts of the fraudster is not known

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of Financial Studies Other Related issues

Conditions for writing off receivables

• When the fraudster has no property

• When the property disposed covers only portion of the receivable

• When statutory period of limitation elapses

• When the final appellate court rules against the bank

It is to be noted that in order to write off receivables from books of accounts, branches or head
office units of the bank must ascertain that provision is set aside for each receivable. However,
receivables whose value is less than or equal to Birr 100.00 can be written off against expense.

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Conditions for writing off receivables….

• In the past every step of accounting record requires human involvement
these accomplished manually as a result of which the probability of
making errors was high.
• Today not required everything manually, this dose not mean that
accounting records are completely error free.
• Sometime these outstanding that happened by the above reasons may
cause legal and financial damage to the bank or its employees.

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2.Reconciling Our bank Account with correspondent Banks Accounts

• The matching of all debits to our bank account on the books of

correspondent banks (By referring to daily Bank statement) to credits
to the correspondent bank our account(Nostro Account) on the books
of our bank(Mirror Account), and all credits to our bank account on the
books of the correspondent bank to debits to the correspondent bank
our account on the books of our bank.
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2.Reconciling Our bank Account with correspondent Banks Accounts…..

• Upon receipt of such statements, the Reconciliation Section at the Finance

Process reconciles against the items posted on the respective accounts in
our books of accounts and cross date those settled items

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of Financial Studies Other Related issues

Leave Preparation
Preparation of Leave Schedule

• As per the provisions stated in the collective agreement of the Bank, any
staff with a minimum service period of one year is entitled to annual
leave of 18 working days. Thereafter, for any additional service period of
one year an extra one working day is added to his annual leave.

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of Financial Studies Other Related issues

Leave Preparation
• Generally speaking an employee should proceed on leave according to
his will and it should never be upon instruction of the organization
unless forced by circumstances.
• an employee should schedule the leave program (which is pre-arranged
by the Bank) at the beginning of year usually Jan and this program
should be strictly adhered to.

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of Financial Studies Other Related issues

Leave without pay

• Leave without pay is a special kind of arrangement for employees who
for one reason or another cannot exercise their right to annual leave but
faced with justifiable personal affair. If the bank feels comfortable with
the justification of an employee, it can give leave without pay up to 30
days leave without pay

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of Financial Studies Other Related issues

Sick leave:
• The first 60 days with full salary payment.
• The next 60 days with half salary payment
• The next 60 days with 1/3rd salary payment. 90 days for cases of
HIV/AIDS
• If after 180 days, the employee cannot recover and in no position to
resume duty, as justified by a physician, the bank can relieve the
employee from duty in line with the provisions of the law and the
collective agreement.

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Maternity leave:
• Expecting woman employee is entitled to thirty consecutive days of pre-
natal and Ninety consecutive days of post- natal leave. If an employee
delivered before the completion of the pre-natal leave, she would be
entitled to the remaining days of the prenatal leave plus the post- natal
leave period

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of Financial Studies Other Related issues

Payroll preparation
Preparation of Payroll
• Payroll is a list of staff along with salary payments and deductions
therein. In other words, payroll contains the total amount of salaries to
be paid to staff members along with the deductions.
• Salary and other benefit payment period usually from 25 to 27 days of
every month in CBE case

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of Financial Studies Other Related issues

Payroll preparation

Benefit include at the time of salary payment

Basic Salary, Cash Indemnity, Housing allowance, Hardship allowance
Other benefit paid at the end of the month
Fuel allowance, Representation allowance, Shifting allowance,
Verification allowance,

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of Financial Studies

GAAP VS IFRS
Generally Accepted Accounting Principles (GAAP) and International Financial
Reporting Standards (IFRS) are the two primary accounting frameworks used
in the world today.

International Financial Reporting Standards (IFRS) is the accounting method

that’s used in many countries across the world. It has some key differences
from the Generally Accepted Accounting Principles (GAAP) implemented in
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IFRS - The current Financial Institutions Accounting

oIFRS- International Financial Reporting Standards

IASB- International Accounting Standards Board
IAS- International Accounting Standards
GAAP- Generally Accepted Accounting Principles
FASB – Financial Accounting Standards Board
IPSAS – International Public Sector Accounting Standards
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of Financial Studies

The difference b/n IFRS & GAAP

• Focus point:-Principle base, expected to use best judgment in
following the principles.

IFRS • Inventory method :- LIFO not allowed

• Fixed Assets:- revaluation model based on the fair value at the
current date.
• Classification of Liabilities:-all debts are considered noncurrent
on the balance sheet.
• Development costs:-that all development costs be charged to
expense as incurred.
• Focus point:-Rule base, it is full of very specific rules
• Inventory method -including LIFO all methods are possible.

GAAP •
•
Fixed Assets:-assets using the cost model based on historical value.
Classification of Liabilities:-consider as current liabilities and non
current liabilities.
• Development costs:-these costs to be capitalized and amortized over
multiple periods.
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of Financial Studies

The similarities between IFRS & GAAP

There are many similarities in US GAAP and IFRS guidance on financial
statement presentation. Under both sets of standards, the components of a
complete set of financial statements include: -
a statement of financial position,
a statement of profit and loss (i.e., income statement) and a statement of
comprehensive income (either a single continuous statement or two
consecutive statements),

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of Financial Studies

Benefits of IFRS

• Credibility of local market to foreign investors

• More cross-border investment

• Efficient capital allocation

• Comparability across political boundaries

• Facilitates global education and training

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of Financial Studies

Benefit of IFRS to companies!

• Lower cost of capital

• Facilitates raising capital abroad

• Integrated IT systems

• One set of books + easier consolidation

• Better understanding of financial statements from business partners
abroad
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of Financial Studies

IFRS Adoption

• More than 166 countries

• International support to have global accounting standards
G20
WB
IMF
Basel Committee,
International Organization of Securities Commissions
International Federation of Accountants
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of Financial Studies

IFRS in Ethiopia

• Ethiopia passed a financial reporting law in 2014 which requires the use of
IFRS by commercial businesses operating in Ethiopia.
Proclamation No. 847/2014
Regulation No. 332/2014
Directives to be issued by AABE(Accounting and auditing Board of
Ethiopia)

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of Financial Studies

IFRS in Ethiopia

The proclamation requires:

• Commercial organizations to follow
 International Financial Reporting Standards (IFRS), or
 International Financial Reporting Standards for Small and Medium
Enterprises (IFRS for SMEs)
• Charities and societies to follow International Public Sector Accounting
Standards (IPSAS)
• Public auditors to follow International Standards for Auditing.

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of Financial Studies

IFRS in Ethiopia

• Public interest entity (PIE) should use the full IFRS.

• A PIE is a reporting entity that is of significant public relevance because of
the nature of its business, its size, its number of employees.
• PIE also includes banks, insurance companies, and any other financial
institutions and public enterprises.

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Users of Accounting & Financial Reporting

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of Financial Studies

IASB and IFRS

• IFRS is developed by the International Accounting Standards Board (IASB),

which operates under the oversight of the IFRS Foundation.
• IASB was formerly called International Accounting Standards Committee
(IASC)
• IASB is based in London

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 List of Applicable IFRS

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IFRS Comprises

International Accounting
Standards (IAS) -28

International Financial Reporting

Standards (IFRS)-16

Standing Interpretations
Committee (SIC)- 8

International Financial Reporting

Interpretations Committee (IFRIC)-
18

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of Financial Studies

International Accounting Standards (IAS)

1. IAS 1: Presentation of Financial Statements

2. IAS 2: Inventories
3. IAS 7: Statement of Cash Flows
4. IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors

5. IAS 10: Events after the Reporting Period

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International Accounting Standards (IAS)

6. IAS 11: Construction Contracts (will be superseded by IFRS 15 as of 1

January 2018)
7. IAS 12: Income Taxes
8. IAS 16: Property, Plant and Equipment
9. IAS 17: Leases
10. IAS 18: Revenue (will be superseded by IFRS 15 as of 1 January 2018)
11. IAS 19: Employee Benefits

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of Financial Studies

International Accounting Standards (IAS)

12. IAS 20: Accounting for Government Grants and Disclosure of Government
Assistance
13. IAS 21: The Effects of Changes in Foreign Exchange Rates
14. IAS 23: Borrowing Costs
15. IAS 24: Related Party Disclosures
16. IAS 26: Accounting and Reporting by Retirement Benefit Plans
17. IAS 27: Separate Financial Statements

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of Financial Studies

International Accounting Standards (IAS)

18. IAS 28: Investments in Associates and Joint Ventures

19. IAS 29: Financial Reporting in Hyperinflationary Economies
20. IAS 32: Financial Instruments: Presentation
21. IAS 33: Earnings per Share
22. IAS 34: Interim Financial Reporting
23. IAS 36: Impairment of Assets

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International Accounting Standards (IAS)

24. IAS 37: Provisions, Contingent Liabilities and Contingent Assets

25. IAS 38: Intangible Assets
26. IAS 39: Financial Instruments: Recognition and Measurement (will be
superseded by IFRS 9 as of 1 January 2018)
27. IAS 40: Investment Property
28. IAS 41: Agriculture

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of Financial Studies

International Financial Reporting Standards (IFRS)

1. IFRS 1: First-time Adoption of International Financial Reporting Standards

2. IFRS 2: Share-based Payment
3. IFRS 3: Business Combinations
4. IFRS 4: Insurance Contracts
5. IFRS 5: Non-current Assets Held for Sale and Discontinued Operations
6. IFRS 6: Exploration for and Evaluation of Mineral Resources
7. IFRS 7: Financial Instruments: Disclosures
8. IFRS 8: Operating Segments
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of Financial Studies

International Financial Reporting Standards (IFRS)

9. IFRS 9: Financial Instruments (will replace IAS 39 as of 1 January 2018)

10. IFRS 10: Consolidated Financial Statements
11. IFRS 11: Joint Arrangements
12. IFRS 12: Disclosure of Interests in Other Entities
13. IFRS 13: Fair Value Measurement
14. IFRS 14: Regulatory Deferral Accounts
15. IFRS 15: Revenue from Contracts with Customers (will replace IAS 11 and
IAS 18 as of 1 January 2018)
16. IFRS 16: Leases (replaces IAS 17 as of January 1, 2019)
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of Financial Studies

Standing Interpretations Committee Interpretations (SIC)

1. SIC-7: Introduction of the Euro

2. SIC-10: Government Assistance – No Specific Relation to Operating
Activities
3. SIC-15: Operating Leases – Incentives (will be superseded by IFRS 16 as of
1 January 2019)
4. SIC-25: Income Taxes – Changes in the Tax Status of an Entity or its
Shareholders

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of Financial Studies

Standing Interpretations Committee Interpretations (SIC)

5. SIC-27: Evaluating the Substance of Transactions Involving the Legal Form

of a Lease (will be superseded by IFRS 16 as of 1 January 2019)
6. SIC-29: Service Concession Arrangements: Disclosures
7. SIC-31: Revenue – Barter Transactions Involving Advertising Services (will
be superseded by IFRS 15 as of 1 January 2018)
8. SIC-32: Intangible Assets – Web Site Costs

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of Financial Studies

International Financial Reporting Interpretations Committee (IFRIC)

1. IFRIC 1: Changes in Existing Decommissioning, Restoration and Similar

Liabilities
2. IFRIC 2: Members’ Shares in Co-operative Entities and Similar Instruments

3. IFRIC 4: Determining whether an Arrangement contains a Lease (will be

superseded by IFRS 16 as of 1 January 2019)
4. IFRIC 5: Rights to Interests arising from Decommissioning, Restoration and
Environmental Rehabilitation Funds

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of Financial Studies

International Financial Reporting Interpretations Committee (IFRIC)

1. IFRIC 1: Changes in Existing Decommissioning, Restoration and Similar

Liabilities
2. IFRIC 2: Members’ Shares in Co-operative Entities and Similar Instruments

3. IFRIC 4: Determining whether an Arrangement contains a Lease (will be

superseded by IFRS 16 as of 1 January 2019)
4. IFRIC 5: Rights to Interests arising from Decommissioning, Restoration and
Environmental Rehabilitation Funds

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of Financial Studies

International Financial Reporting Interpretations Committee (IFRIC)

5. IFRIC 6: Liabilities arising from Participation in a Specific Market – Waste

Electrical and Electronic Equipment
6. IFRIC 7: Applying the Restatement Approach under IAS 29 Financial
Reporting in Hyperinflationary Economies
7. IFRIC 9: Reassessment of Embedded Derivatives
8. IFRIC 10: Interim Financial Reporting and Impairment

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International Financial Reporting Interpretations Committee (IFRIC)

9. IFRIC 12: Service Concession Arrangements

10. IFRIC 13: Customer Loyalty Programs (will be superseded by IFRS 15 as
of 1 January 2018)
11. IFRIC 14: IAS 19 – The Limit on a Defined Benefit Asset, Minimum
Funding Requirements and their Interaction
12. IFRIC 15: Agreements for the Construction of Real Estate (will be
superseded by IFRS 15 as of 1 January 2018)

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International Financial Reporting Interpretations Committee (IFRIC)

13. IFRIC 16: Hedges of a Net Investment in a Foreign Operation

14. IFRIC 17: Distributions of Non-cash Assets to Owners
15. IFRIC 18: Transfer of Assets from Customers (will be superseded by IFRS
15 as of 1 January 2018)
16. IFRIC 19: Extinguishing Financial Liabilities with Equity Instruments
17. IFRIC 20: Stripping Costs in the Production Phase of a Surface Mine
18. IFRIC 21: Levies

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THE END

Thank You!!!
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